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AUTHENTICATED
US. GOVERNMENT
INFORMATION ^

HEARING

BEFORE THE

COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATHH]S

ONE HUNDRED FOURTEENTH CONGRESS

FIRST SESSION

APRIL 29, 2015

Serial No. 114-22

Printed for the use of the Committee on the Judiciary

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COMMITTEE ON THE JUDICIARY

BOB GOODLATTE, Virginia, Chairman

JOHN CONYERS, Jr., Michigan
JERROLD NADLER, New York
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
STEVE COHEN, Tennessee

F. JAMES SENSENBRENNER, jR.,
Wisconsin

LAMAR S. SMITH, Texas
STEVE CHABOT, Ohio
DARRELL E. ISSA, California
J. RANDY FORBES, Virginia
STEVE KING, Iowa
TRENT FRANKS, Arizona
LOUIE GOHMERT, Texas
JIM JORDAN, Ohio
TED POE, Texas
JASON CHAFFETZ, Utah
TOM MARINO, Pennsylvania
TREY GOWDY, South Carolina
RAUL LABRADOR, Idaho
BLAKE FARENTHOLD, Texas
DOUG COLLINS, Georgia
RON DeSANTIS, Florida
MIMI WALTERS, California
KEN BUCK, Colorado
JOHN RATCLIFFE, Texas
DAVE TROTT, Michigan
MIKE BISHOP, Michigan

HENRY C. “HANK” JOHNSON, jR.,
Georgia

PEDRO R. PIERLUISI, Puerto Rico
JUDY CHU, California
TED DEUTCH, Florida
LUIS V. GUTIERREZ, Illinois
KAREN BASS, California
CEDRIC RICHMOND, Louisiana
SUZAN DelBENE, Washington
HAKEEM JEFFRIES, New York
DAVID N. CICILLINE, Rhode Island
SCOTT PETERS, California

Shelley Husband, Chief of Staff & General Counsel
Perry Apelbaum, Minority Staff Director & Chief Counsel

(H)

CONTENTS

APRIL 29, 2015

Page

OPENING STATEMENTS

The Honorable John Conyers, Jr., a Representative in Congress from the
State of Michigan, and Ranking Member, Committee on the Judiciary 1

The Honorable Bob Goodlatte, a Representative in Congress from the State
of Virginia, and Chairman, Committee on the Judiciary 54

WITNESS

The Honorable Maria A. Pallante, Register of Copyrights and Director, United
States Copyright Office

Oral Testimony 3

Prepared Statement 7

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Material submitted by the Honorable Tom Marino, a Representative in Con-
gress from the State of Pennsylvania, and Member, Committee on the
Judiciary 43

Material submitted by the Honorable Judy Chu, a Representative in Congress
from the State of California, and Member, Committee on the Judiciary 58

Material submitted by the Honorable Ted Deutch, a Representative in Con-
gress from the State of Florida, and Member, Committee on the Judiciary ... 70

Material submitted by the Honorable Doug Collins, a Representative in Con-
gress from the State of Georgia, and Member, Committee on the Judiciary .. 72

APPENDIX

Material Submitted for the Hearing Record

Response to Questions for the Record from the Honorable Maria A. Pallante,
Register of Copyrights and Director, United States Copyright Office 85

OFFICIAL HEARING RECORD
Unprinted Material Submitted for the Hearing Record

List of material submitted for the Official Hearing Record 92

http: / ! docs.house.gov / Committee t Calendar / ByEvent.aspx?EventID=103385

(III)

WEDNESDAY, APRIL 29, 2015

House of Representatives
Committee on the Judiciary
Washington, DC.

The Committee met, pursuant to call, at 10 a.m., in room 2141,
Rayburn House Office Building, the Honorable Tom Marino pre-
siding.

Present: Representatives Goodlatte, Smith, Chabot, Issa, King,
Gohmert, Jordan, Poe, Marino, Labrador, Farenthold, Collins, Wal-
ters, Buck, Ratcliffe, Trott, Bishop, Conyers, Nadler, Lofgren, Jack-
son Lee, Chu, Deutch, Bass, DelBene, and Jeffries.

Staff Present: (Majority) Shelley Husband, Chief of Staff & Gen-
eral Counsel; Branden Ritchie, Deputy Chief of Staff & Chief Coun-
sel; Allison Halataei, Parliamentarian & General Counsel; Joe
Keeley, Chief Counsel, Subcommittee on Courts, Intellectual Prop-
erty, and the Internet; Kelsey Williams, Clerk; (Minority) Perry
Apelbaum, Staff Director & Chief Counsel; Danielle Brown, Parlia-
mentarian; Norberto Salinas, Counsel; Jason Everett, Counsel; and
Maggie Lopatin, Clerk.

Mr. Marino. The Judiciary Committee will come to order.

Without objection, the Chair is authorized to declare recesses of
the Committee at any time.

We welcome everyone this morning to our hearing on the Reg-
ister’s Perspective on Copyright and Review. And I know we will
get a very thorough, in-depth analysis of this.

I’m going to turn first now to Ranking Member Conyers for his
statement.

And Chairman Goodlatte will arrive shortly to give his opening
statement.

And, with that. Ranking Member Conyers.

Mr. Conyers. Thank you. Chairman Marino.

And to the Committee that will be coming in soon and to all of
our interested friends that are in the audience. You know, in the
Declaration of Independence, our Founders — wait a minute — okay.

Today’s hearing culminates the Committee’s 2-year-long exam-
ination of the Copyright Act, a process that has involved 19 hear-
ings and 99 witnesses. Our current Register of Copyrights here
today makes 100 witnesses. It’s a particularly fitting occasion that
Ms. Maria Pallante, the Register of Copyrights, testifies at this
final hearing, as she was the first witness to testify at the begin-

( 1 )

ning of the process. Over the course of this review, we’ve identified
several priorities that I think we should consider. First, if our Na-
tion is to have a strong copyright system, we, in Congress, must
restructure the Copyright Office.

The Office examines the Register’s copyright claims, records
copyrighted documents, and administers statutory licenses. It pro-
vides expert copyright advice to Congress as well as various Fed-
eral agencies concerning trade agreements, treaty negotiations, and
court proceedings. And the Office recommends much needed im-
provements to the copyright system.

Nevertheless, the existing Copyright Office is ill-equipped finan-
cially and structurally to handle certain challenges presented by
technological developments and the growing demands of the copy-
right system. Essentially, the Office needs to modernize and be-
come more user-friendly and efficient.

I thank Ms. Pallante for acknowledging the Office’s limitations in
her post-hearing response to my February request about her views
on reorganizing the copyright letter. Her thorough response in-
cluded different alternative proposals to help Congress determine
how best to approach restructuring the Copyright Office. Now I
welcome other stakeholders in the copyright community to submit
to us their views and proposals to help bring the Copyright Office
into the 21st century.

The 2-year review has highlighted several other areas where the
copyright community can find common ground and which Congress
should address promptly. A forum to resolve small claims should
be established. Fortunately, the Office has already submitted a leg-
islative proposal for addressing the need.

With respect to music licensing, the Office recently issued a re-
port recommending reforms. For me, that’s a very important area.
Pending actions in the courts and by the Department of Justice will
provide additional guidance to Congress as it considers reforming
music licensing. The Fair Play Fair Pay Act, H.R. 1733, which I
support, is one legislative proposal to address music licensing, the
AM/FM royalties for musicians, which is not paid. The issue of or-
phan works must also be addressed. The Copyright Office will soon
be issuing a report which will provide Congress a much needed
framework for a legislative solution. As more copyrighted content
continues to move to the Internet, current criminal enforcement
laws must be updated to deter copyright infringement while en-
couraging new technological platforms which utilize the licensing
copyright.

These are a few of the copyright-related issues that have come
to our attention over the last 2 years that Congress should address
without delay. For areas which are not ripe and need more detailed
discussion, we should request that the Copyright Office issue re-
ports and submit legislative proposals on which we can act in the
near term.

And, finally, this review has confirmed that strong copyright pro-
tections are integral to a strong and vibrant copyright system. I’ve
noted many times during this Committee’s review that we must en-
sure that the copyright system treats creators fairly and fosters
their continuing creativity. Whatever changes Congress makes to
the Copyright Act must promote creation among artists and protect

their rights. Strong copyright protections will also foster a market-
place for content that consumers will enjoy as well as encourage
technological innovation that can be used to watch the content. I
thank the Chair for holding today’s hearings.

And I welcome and look forward to hearing from Register
Pallante.

Thank you, Mr. Chairman.

Mr. Marino. Thank you, Congressman.

I want to welcome our distinguished witness here today.

And if you would please rise and raise your right hand, I will
swear you in. Do you swear that the testimony you’re about to give
is the truth, the whole truth, and nothing but the truth so help you
God?

Ms. Pallante. I do.

Mr. Marino. Please let the record reflect the witness has an-
swered in the affirmative. Please have a seat.

I’m going to begin by introducing the witness today. She has
been to our Committee numerous times. And we look even more
forward today to having her here, the Register of Copyrights, Ms.
Maria Pallante.

And, in her role as Register, Ms. Pallante leads the legal policy
and business activities of the United States Copyright Office. Prior
to being named the 12th Register of Copyrights, Ms. Pallante
served the Copyright Office in a variety of roles, including Deputy
General Counsel, and then as Associate Register and Director of
Policy and International Affairs.

During her career, she also spent several years as intellectual
property counsel and director of licensing for the worldwide
Guggenheim Museums. Register Pallante is a 1990 graduate of the
George Washington University Law School and holds a bachelor’s
degree in history from Misericordia University.

Ms. Pallante, welcome back, and we are extremely pleased to
have you here today. Your written statement will be entered into
the record in its entirety. And I ask that you summarize your testi-
mony in 5 minutes or less. To help you stay within the time limit,
you’re used to the lights in front of you. I’m not going to go through
that ordeal.

And would you please begin.

TESTIMONY OF THE HONORABLE MARIA A. PALLANTE, REG-
ISTER OF COPYRIGHTS AND DIRECTOR, UNITED STATES

Ms. Pallante. Thank you. Good morning. Vice Chairman
Marino, Ranking Member Conyers, and Members of the Judiciary,
it’s a great honor to be appear before you again this morning to dis-
cuss the copyright law and copyright administration. I wish to
thank this Committee for its work of the past 2 years. As I believe
you know, the review process represents the most comprehensive
focus on copyright issues in the United States in over four decades.
I also want to thank the Committee’s thoughtful policy and over-
sight counsel for the important and very helpful insights they have
shared with my office in our work.

And I want to recognize my own staff for their dedication and en-
thusiasm at every turn, both in the complex portfolios that they

carry and the numerous and respectful interactions that they have
on a daily basis with so many stakeholders. The Committee’s re-
view process was designed to sort through the many competing eq-
uities that make up the public interest in the digital age. Balancing
these equities is more challenging than ever before. But it is tre-
mendously important. In fact, Congress has amended the Copy-
right Act multiple times since 1790, each time ensuring that it is
strong, flexible, and consistent with our cherished principles of
freedom of expression. These are the themes that have come
through in abundance this time as well, both from Members of this
Committee and the many talented witnesses, all 98 of them, that
have appeared before the Committee.

Before turning to the issues, I would like to highlight some of the
recent efforts of my office. In the past 4 years, in support of the
Committee’s work, we have published seven policy studies, and we
have two forthcoming. With respect to Copyright Office technology,
we completed and published a proactive report and recommenda-
tions on current challenges and goals, drawing on public inquiries,
stakeholder meetings, and expert research. In the area of copyright
administration, we published a major overhaul of the Compendium
of Copyright Office Practices, the first one since 1988, setting forth
new legal guidance in the area of registering digital authorship.

And, on the subject of document recordation, we released a major
report assessing how the Office records copyright transactions for
the public. This report is the foundation for transforming the data-
base that we have from a paper-based process to an innovative and
interoperable platform for the digital economy. In all of this work,
we solicited the participation of the public, including scholars, li-
brarians, public interest organizations, bar associations, and the
content and technology sectors. I am grateful to these important
communities for participating in our work and for providing critical
legal and practical perspectives.

I have been especially inspired by the stories of authors across
the country, many of whom took time to talk with me personally,
including songwriters, recording artists, producers, photographers,
graphic artists, book authors, dramatists, and independent
filmmakers, all of whom want to be credited and compensated for
their work. As Register, it has become clear to me that the intel-
ligent and connected world we live in depends heavily upon the cre-
ativity and discipline of authors.

My staff and I have reviewed all of the witness testimony of the
last 2 years and we’ve divided our recommendations into four cat-
egories: Eight issues that are ripe for legislative action if the Com-
mittee so chooses; four issues that require foundational analysis
and public study to assist you; a number of issues that are not as
urgent; and overarching matters related to the Copyright Office
itself These are all further highlighted in my 32-page written
statement. But I will highlight just a few of them here.

Starting with the first category, if the Committee is prepared to
act, it is in a strong position to develop or advance legislation now
or in the very near feature in these areas: One, overhauling the
music licensing provisions of the Copyright Act; two, codifying a re-
sale royalty act for visual art; three, creating a tribunal for small
copyright claims; four, enacting felony streaming provisions; five.

updating the outdated exceptions that libraries, archives, and mu-
seums use; six, creating a framework to use orphan works; seven,
updating the exceptions for persons who are blind or visually im-
paired; and, eight, shifting the regulatory presumption in the sec-
tion 1201 rulemaking.

I will not go into detail about updating library exceptions or the
exceptions for persons who are blind or visually impaired. But I
will sum them up by saying that while some have opposed amend-
ing them because they would prefer to rely upon fair use, there is
virtually no dispute that these sections are outdated to the point
of being obsolete. Many individuals who need them do not have
clear guidance about what they can and cannot copy, access, adapt,
or share without permission. The provisions do not serve the public
interest, and it is our view that it is untenable to leave them in
their current state. We have studied them extensively, and we will
be providing appropriate revisions to the Committee.

Likewise, it is clear that we have an orphan works problem and
that most people want a framework that removes egregious dam-
ages for good-faith users but also establishes a reasonable payment
mechanism for copyright owners who reappear. The Copyright Of-
fice has studied this issue for 10 years, and we will be releasing
an updated proposal again soon.

Turning to music, we recently released a major study of the li-
censing landscape. Our music community is struggling, as the
Committee knows, to apply outdated practices, many of which are
government-mandated. We have proposed a series of balanced
changes to promote more efficient licensing practices, greater par-
ity among competing platforms, and fair compensation for creators,
including greater latitude for rights holders to negotiate licenses in
the free market. The groundwork has been laid for a follow-on proc-
ess under the oversight of this Committee, and my office remains
available to assist you.

With respect to small claims, we also believe the case has been
made. In our 2013 report to the Committee, we noted the daunting
challenges faced by copyright owners seeking to pursue small copy-
right claims through the Federal court process. And we rec-
ommended the creation of an alternative but voluntary tribunal for
this purpose. Although modest in economic value, these claims are
not small to the individual creators who are deprived of income or
opportunities when their works are infringed.

Likewise, we think defendants should be able to raise appro-
priate defenses in the small claims context. I hope you will give se-
rious consideration to our proposal.

And I want to discuss section 1201. This rulemaking is ripe for
congressional attention and, in fact, is already receiving congres-
sional attention. The anticircumvention provisions have played an
important role in facilitating innovation and providing consumers
with a wide range of content delivery options. At the same time,
it has become obvious that the regulatory process can be burden-
some for some proponents, especially when trying to renew the ex-
emptions that we granted previously. We are therefore recom-
mending a legislative change to provide a presumption in favor of
renewal in cases where there is no opposition.

For other aspects of section 1201, we are recommending a com-
prehensive study, including the permanent exemptions for security,
encryption, and privacy research. The rulemaking has always heen
a good barometer for public policy concerns. For example, in the
2010 rulemaking, my predecessor. Register Peters, observed that
Congress did not anticipate the types of computer security concerns
that have arisen since enactment of the DMCA and suggested that
the 3-year exemption process is a poor substitute for what is need-
ed in this area.

We are also recommending appropriate study of section 512 of
the DMCA. These notice and take-down provisions were innovative
in 1998, and they have largely served stakeholders well. But there
are challenges now that warrant a granular review. Legitimate
questions are coming from all quarters. However, a core question
is how individual authors are faring under a system that requires
sending notices of infringement over and over and over again with-
out relief.

All other policy issues, those ripe for action and those ripe for
study, are discussed at length in my written statement. However,
I want to flag just two that we have reviewed extensively, the fair
use doctrine and the “making available” right. In studying all the
relevant scholarship, legislative history, and jurisprudence, we
have concluded, as have others, that in each case, the best course
of action would be to leave these provisions untouched.

I will end with Copyright Office modernization. We have greatly
appreciated the Committee’s deliberations and public discourse on
this topic. We have worked to be transparent about systemic defi-
ciencies and future expectations. It’s an exciting opportunity to
rethink the Copyright Office in the 21st Century. And at the re-
quest of Ranking Member Conyers, I have elaborated on these
issues and my perspectives in a recent letter. I believe the Office
requires more secure legal footing and greater operational inde-
pendence in order to carry out its duties effectively and to reflect
the incredible significance of the copyright system in the digital
age. Thank you, Mr. Vice Chairman for the privilege of testifying.

[The prepared statement of Ms. Pallante follows:]

Statement of

MARIA A. PALLANTE

UNITED STATES REGISTER OF COPYRIGHTS AND
DIRECTOR OF THE U.S. COPYRIGHT OFFICE

BEFORE THE

COMMITTEE ON THE JUDICIARY
United States House of Representatives

"THE REGISTER’S PERSPECTIVE ON COPYRIGHT REVIEW"

April 29, 2015

Chairman Goodlatte, Ranking Member Conyers, and Members of the Judiciary Committee;

It is a great honor to appear before you again to discuss issues of copyright law and
copyright administration. My staff and I wish to thank you for the attention this Committee
has invested in reviewing the Copyright Act and related provisions of Title 17 during the
past two years. During this time, you convened twenty hearings and traversed the
formidable span of Title 17. This represents the most comprehensive focus on copyright
issues in over four decades.

1. BACKGROUND AND THEMES

Although copyright iaw has grown more legaliy complex and economically important in
recent years. Congress is uniquely positioned to sort through the many competing equities
that comprise the public interest in this modern era.’ Questions include: how best to
secure for authors the exclusive rights to their creative works; how to ensure a robust
copyright marketplace; how to craft essential exceptions, safe harbors, and limitations; and
howto provide appropriate direction, oversight, and regulation. This balancing act is not

'The United States Congress is not alone in this undertaking. In the past few years, the European Commission
and numerous countries have turned to questions of copyright policy, and several countries, including
Canada, India, Malaysia, Taiwan, and the United Kingdom, have enacted amendments. See, e.g., Copyright
Modernization Act, S.C. 2012, c. 20 [Can.]; The Copyright [Amendment] Act, 2012, No. 27, Acts of Parliament,
2012 [India]; Copyright [Amendment] Act 2012, Act A1420 [2012] [Malay.]; Copyright Act [2014] [Republic
of China): Enterprise and Regulatory Reform Act, 2013, c. 24 [U.K.].

easy, 2 but, as the Supreme Court has stated, it is critical: "[TJhe Copyright Clause empowers
Congress to determine the intellectual property regimes that, overall, in that body’s
judgment, will serve the ends of the Clause."^

Many of the Committee's hearings touched upon not only policy matters but also the
operational and organizational challenges of the Copyright Office in recent years. Thus we
are especially grateful that the Committee chose to hold two hearings on the Office itself,
specifically a September 2014 oversight hearing, at which I testified, and a February 2015
review hearing, at which both copyright association representatives and legal experts
testified. We very much appreciate the Committee's open and deliberative leadership on
questions regarding the role and goals of a twenty-first century Copyright Office. As former
Subcommittee Chairman Howard Coble observed, these matters merit a robust public
discourse.'^

Themes

Some general themes have emerged from the Committee's outstanding copyright review
process:

2 For some perspective on this point, see the Copyright Revision Roundtable of 1961, during which Cyril
Brickfield, Counsel to the House judiciary Committee, spoke with Ahraham Kaminstein, Register of
Copyrights:

Mr, Brickfield: The House Judiciary Committee is 100 percent behind the Copyright Office in

its revision of the copyright law Now, the legislative road ahead may he long and it may

be hard, and it may be bumpy in spots, and somewhere along the way there may be a detour
or two —

Mr, Kaminstein: And blood.

Mr, Brickfield: And blood, too. But in the end this present endeavor will give us all a feeling
of accomplishment and a sense of being proud that we played a part in the promulgation of a
statute that will have become the supreme law of the land.

Staff of H, Comm, on the Judiciary, 88th Cong., Copyright Law Revision Part 2: Discussion and Comments on
Report of the Register of Copyrights on the General revision of the U.S. Copyright Law 44 (Comm. Print
1963).

^ Eldred v. Ashcroft, 537 U.S. 186, 222 (2003].

4 See Oversight of the U.S. Copyright Office: Hearing Before the Subcomm. on Courts, Intellectual Prop., & the
Internet of the H. Comm, on the judiciary, 113th Cong. 2 (2014] (statement of Rep, Howard Coble, Chairman,
Subcomm. on Courts, Intellectual Prop,, & the Internet] (“This discussion needs to be a public one, and it
needs to be approached with an open mind, with the clear objective of building a 21st century digital
Copyright Office"]; A Case Study for Consensus Building: The Copyright Principles Project: Hearing Before the
Subcomm. on Courts, Intellectual Prop., & the Internet of the H. Comm, on the Judiciary, 113th Cong. 8 (2013]
(statement of Rep, Boh Goodlatte, Chairman, H. Comm, on the Judiciary] (“It is my intention to conduct this
broad overview by hearing from everyone interested in copyright law, as we begin by holding hearings on
important fundamentals before we begin to look at more specific issues.”].

(1) The constitutional purpose of copyright law informs all aspects of the debate. ^ In
announcing the review process in 2013, the Chairman said that copyright law "is a
fundamental economic principle enshrined in our Constitution. It has become a core
part of our economy and society in ways the framers of our Constitution could never
have imagined."®

(2) To support this purpose, it is essential that authors are incentivized to contribute to
our culture and society at large, and that they be appropriately credited and
compensated for the music, art, movies, literature, theater, photography, art, news,
commentary, and computer code that we so appreciate and enthusiastically
monetize as a nation. The point is that a connected and intelligent world depends
heavily upon authors and their creative disciplines.^

(3) Likewise, a sound copyright law must recognize and promote the many businesses
that identify, license, and disseminate creative works. These sectors are the heart of
copyright commerce. The law should provide the flexibility they require to innovate
and the certainty they need to protect and enforce their investments. 8 An
investment in copyright law is an investment in the global marketplace.

(4} But of course the ultimate beneficiary of copyright law is the public at large, from
individuals who are captivated by a book or film to libraries that collect and provide
access to our cultural heritage for communities around the country. Thus, while the
rights of authors largely coincide with the interests of the public, a sound copyright
law will balance the application of exclusive rights with the availability of necessary
and reasonable exceptions, and it will ensure the ongoing availability of a flexible
fair use defense.

5 U.S. Const, art. I, § 8, cl. 8 fthe full reads "The (iongress shall have Power ... To promote the Progress of
Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their
respective Writings and Discoveries.”).

® Press Release, House Comm, on the Judiciary, Judiciary Committee Announces Next Round of Copyright
Review Hearings [Nov. IS, 201SJ, uva/iuh/eothttp://judiciary.house.gov/index.cfm/201S/ll/judiciary-
committee-announces-next-round-of-copyright-review-hearings.

^ See, e.Q., Innovation in America: The Role of Copyrights: Hearing Before the Subcomm, on Courts, Intellectual
Prop,, & the Internet of the H. Comm, on the Judiciary, 113th Cong. 2 [2013] [statement of Rep. Bob Goodlatte,
Chairman, H. Comm, on the Judiciary) ["U.S. copyright owners have created millions of high-skilled, high-
paying U.S. jobs, have contributed billions to our economy, and have led to a better quality of life with rich
entertainment and cultural experiences for citizens.").

^ See, e,g,,id, atS [statementofSandraAistars, Executive Director, Copyright Alliance) ["[T]he creative
community does not view copyright and technology as warring concepts in need of balancing. To the
contrary, we are partners and collaborators with the technology community.").

^ See, e.g.,A Case Study for Consensus Building: The Copyright Principles Project at 22 [prepared statement of
Daniel Gervais, Professor of Law, Vanderbilt University Law School) ["Modernizing copyright law should not
involve just trade-offs between those who want more rights and those who want more exceptions. Today's
copyright system should create benefits tor ail stakeholders."); id. at 76 [statement of Pamela Samuelson,
Richard M. Sherman Distinguished Professor of Law, Berkeley Law School, Faculty Director, Berkeley Center

(5) In general, a balanced copyright law can be achieved through a mix of meaningful
exclusive rights and necessary exceptions. However, where the law is silent or non-
specific, interested parties may at times bridge the gaps in limited ways by
undertaking best practices or voluntary solutions to defined problems, Such work
supports the role of Congress in crafting a functional law, but does not remove its
legislative or oversight powers.

(6) To properly administer the copyright laws in the digital era, facilitate the
marketplace, and serve the Nation, the United States Copyright Office must be
appropriately positioned for success. As stated by one Member of this Committee,
"it is time to enact a restructured, empowered, and more autonomous Copyright
Office that's genuinely capable of allowing America to compete and to protect our
citizen's property in a global marketplace."!!

As always, the Copyright Office has been active in studying and discussing these broad
themes and fine points of law. Since the most recent Copyright Act was enacted in 1976,
the Office has issued more than thirty reports and studies on various aspects of the law
(sixteen since the passage of the Digital Millennium Copyright Act (“DMCA'') in 1998), and
engaged in countless rulemakings and public discussions. Policy studies have examined
such diverse issues as works of architecture, rental of computer software, waiver of moral
rights in visual artworks, legal protections for computer databases, distance education, and
treatment of orphan works.

During my tenure of the past four years. Copyright Office experts have;

• Worked with the public on nine policy studies (seven of which are complete);

for Law & Technology) ("1 think something that came out of our deliberations which 1 think is something that
can carry forward is a notion that if we find a way to articulate what the right balance is and we identify
exclusive rights and some exceptions to those rights that become comprehensible, that become predictable,
that they can, in fact, advance over time and get applied to new things."); Innovation in America (Part II): The
Role of Technology: Hearing Before the Subcomm. on Courts, Intellectual Prop., & the Internet of the H. Comm, on
the judiciary, 113 th Cong. IB.S [2013) [statement of Jim Fruchterman, CEO/Founder, Benetech) ["intellectual
property laws at their hest can encourage technological advances, reward creativity, and bring benefits to
society. To make this possible, we must keep the balance in copyright We need to defend fair use as a
laboratory for creativity ").

See, e.g., The Role of Voluntary Agreements in the U.S. Intellectual Property System: Hearing Before the
Subcomm. on Courts, Intellectual Prop., & the Internet of the H. Comm, on the Judiciary, 113th Cong. (2013)
[reviewing voluntary initiatives),

U.S. Copyright Office: Its Functions and Resources: Hearing Before the Suhcomm. on Courts, Intellectual Prop.,
& the Internet of the H. Comm, on the Judiciary, 113th Cong. 98 (2015) (statement of Rep, Ted Deutch, Member,
Subcomm. on Courts, Intellectual Prop,, & the Internet).

• Completed a multi-year technology report;

• Published and implemented a new schedule of fees for services;

• Completed and implemented a wholly revised Compendium of US. Copyright Office
Practices, including registration practices for digital authorship, for the benefit of
our examiners, copyright owners, the general public, and the courts; and

• Completed a free, user-friendly database of major fair use holdings. 12

in this work, Copyright Office lawyers have sought and obtained input from broad swaths
of the public, holding multiple public roundtables in Washington, D.C., New York, Nashville,
Los Angeles, and Palo Alto, and speaking with or addressing a diversity of stakeholders in
countless meetings in these same cities as well as in Berkeley, Redmond, Chicago, Mountain
View, and several international locations.

My Office has provided expert staff to the United States treaty delegations for the Beijing
Treaty on Audiovisual Performances and the Marrakesh Treaty to Facilitate Access to
Published Works for Persons Who Are Blind, Visually Impaired or Otherwise Print Disabled.
Additionally, we have supported the trade agenda of the United States, serving as part of
the negotiating team on intellectual property issues for the Trans-Pacific Partnership and
the Trans-Atlantic Trade and Investment Partnership. And, as always, we have assisted the
work of the Department of justice, including in American Broadcasting Companies, Inc. v.
Aereo, Inc.,'‘^ Petrella v. Metro-Goldwyn-Mayer, Inc.,'* and Golan v. Holder.'^

The seven completed policy studies and publication dates areas follows: [1) Copyright and the Music
Marketplace [2015]; [2] Transforming Document Recordation at the U.S. Copyright Office [2014]; [3] Resale
Royalties: An Updated Analysis [2013]; [4] Copyright Small Claims [2013]; [5] Legal Issues in Mass
Digitization; A Preliminary Analysis and Discussion Document [2011): [6] Federal Copyright Protection for
Pre-1972 Sound Recordings [2011] [commenced hy former Register Peters); and [7] Satellite Television
Extension and Localism Act (2011) [commenced by former Register Peters). These are available under
"Policy Reports" at http://copyright.gov/poiicy/poiicy-reports.htmi.

The two forthcoming studies are; (1) Making Available Right Under U.S. Law [forthcoming 2015]; and (2)
Updated Solutions for Orphan Works and Mass Digitization (forthcoming 2015). Information regarding these
is available under “Active Policy Studies" at http:/ /copyrighLgov/policy.

The Report and Recommendations of the Technical Upgrades Special Project Team is available under
"Technology Reports" at http://copyright.gov/technology-reports/. [The Reports of the Government
Accountability Office and the Responses of the Librarian of Congress and Register of Copyrights, respectively,
are also available here].

The Schedule of Fees is available under "About Us" at http://copyright.gov/docs/fees.html, and the Public
Study is available athttp://copyright.gov/docs/newfees/USCOFeeStudy-Novl3.pdf.

The Compendium of U.S. Copyright Office Practices is available at http://copyright.gov/comp3/comp-
index.html.

The Copyright Office commenced its fair use database in support of the Joint Strategic Plan of the Office of the
Intellectual Property Enforcement Coordinator. See U.S. INTELLECTUAL Property Enforcement Coordinator,
2013 Joint Strategic Plan on Intellectual Property Enforcement 18 [2013], available at https://www.
whitehouse.gov/sites/default/files/omb/IPEC/2013-us-ipec-joint-strategic-plan. pdf

13 134 S. Ct. 2498 (2014).

II. COPYRIGHT OFFICE MODERNIZATION

Through its oversight powers, and during the course of hearings over the past two years,
the House Judiciary Committee has explored a number of questions relating to the
Copyright Office's governance and operations, including the scope of statutory functions,
constitutional organization, staffing, regulatory authorities, accountability, funding, and
technology.!'^ Members of Congress on the House and Senate Appropriations Committees
(the Subcommittees on Legislative Branch Appropriations) have also identified pertinent
issues in recent months. !^ Among other matters. Congress is examining the relationship of
the Copyright Office to the Library of Congress.

Congress created the Copyright Office and the position of Register of Copyrights just before
the dawn of the 20*^!' century.’^ By statute, the Register and all Copyright Office employees
are appointed by and accountable to the Librarian, working under the Librarian's general
direction and supervision.!^ As with the Copyright Royalty judges, the Register serves at
the Librarian’s pleasure and may be removed without cause. At the same time, the law
vests statutory and regulatory responsibilities specifically with the Register, including
registering copyrights, recording copyright documents, administering statutory licenses,
providing legal and policy advice, and reviewing the determinations of the Copyright
Royalty Judges for legal error.^*^

in34S, Ct. 1962 [2014),

'■^132 3. Ct.873 [2012].

As I mentioned during the September 2014 Copyright Office oversight hearing, and as highlighted by
witnesses at the February 2015 hearing, the constitutional placement of the Copyright Office within the
Library presents a complex set of challenges. See Oversight of the U.S. Copyright Office at 54 [statement of
Maria A. Pallante, Register of Copyrights and Director of the U.S. Copyright Office); U.S. Copyright Office: Its
Functions and Resources at 52 [statement of Robert Brauneis, Professor, George Washington University Law
School). These constitutional issues have arisen in the courts as well. See Intercoiiegiate Broad. Sy.^. v.
Copyright Royalty Bd., 684 F.3d 1332, 1341-42 [D.C. Cir. 2012) (discussing the Library's functions vis-^-vis the
copyright system, and concluding that "[i]n this role the Libraiy is undoubtedly a 'component of the Executive
Branch'") [quoting Free Enterprise Fynd v. Pub. Co. Accounting Oversight Bd., 130 S. Ct, 3138, 3163 [2010]).

See, e.g., Fiscal Year 2016 Budget Hearing on the Architect of the Capitol and Library of Congress Before the H.
Subcomm. on Legis. Branch of the H. Comm, on Appropriations, 114th Cong. [2015), oral testimony at 1:15:04,
available at http://appropriations.house.gov/calendar/eventsingle.aspx?EventID=393997 [statement of
Maria A, Pallante, Register of Copyrights and Director of the U.S. Copyright Office) [responding affirmatively
to Ranking Member Wasserman Schultz that it would be beneficial tor the Copyright Office to separate out its
budget from the Library of Congress and submit it directly to Congress).

This followed a brief period, from 1870-1896, during which the Library administered copyright
registration services directly. Before this, from 1790 to 1870, registration was handled by the disparate
federal courts.

in7U.S,C.§701(a].

20 See, e.g., id. §§ 203[a)(4)[B), 408, 701, 802(f)[l)(;D).

The Copyright Office also serves the broader government, that is, not only Congress but
also the Department of Justice, the Department of State, the Office of the United States
Trade Representative, and other federal agencies. As intellectual property has grown more
and more important to the Nation, Congress has been consistently mindful of the Copyright
Office's longstanding role. For example, when it converted the director of the U.S. Patent
and Trademark Office into an Undersecretary position in 1999, Congress provided that
"nothing shall derogate from the duties and functions of the Register of Copyrights," and
required the Director to "consult with the Register of Copyrights on all copyright and
related matters."^i The courts have long cited and deferred to the work of the Copyright
Office on substantive as well as administrative issues.

Notwithstanding its growing mission, the Copyright Office has one of the smallest staffs
within the government generally or the Library specifically. The Library is currently
operating with or seeking approximately 3400 full-time employees ("FTEs"J overall. Of
these, 1371 are allocated to staff carrying out functions of the national library and 622 are
allocated to the Congressional Research Service. The Copyright Office will have 411 FTEs
to carry out its basic mission in Fiscal Year 2016, reduced from 439 last year . 22 Since 2007,
the Office’s FTE ceiling has dropped precipitously.

Although the Copyright Office has a separate line appropriation, its budget is part of the
Library's budget, is presented to Congress by the Library, and is weighed and prioritized by
the Library alongside other needs of the Library. This is a standard means of budget
formulation for many agencies, but it generally has not served the copyright system well.
The Copyright Office budget is consistently in the neighborhood of $50 million, of which
$30 million is derived from fees paid by customers for registration and other services . 23
The Library's overall budget for 2015 is approximately $630 million, inclusive of the
Copyright Office .24 Without taking anything away from the important duties or funding
deficiencies in the rest of the Library, the Copyright Office's resources are inadequate to
support the digital economy it serves. Some but not all of this situation may be remedied
through future fee schedules or by permitting the Office to assess future capital costs.
Although the Copyright Act currently limits the Office in this regard, 1 have suggested

See 35 U.S.C. § 2(c][3J, [5J: see also 15 U.S.C. § 8111[b)(3][AJ(ii] [creating the position of intellectual
Property Enforcement Coordinator in 2008 and making the Register of Copyrights a member of the advisory
committee),

22 Library OF CONGRESS; Library OF Congress Fiscal 2016 Budget JusTfFiCATiON 7 [2015) [referencing staffing
over past couple of years), available at http://copyright.gov/about/budget/2015/loc-fy2016-budget-
justification.pdf

22 For a more detailed discussion, see Statement of Maria A. Pallante, United States Register of Copyrights,
Before the Subcommittee on Legislative Branch Appropriations, United States Senate, Fiscal 2016 Budget
Request 4 [Mar. 17, 2015), available at http://copyrightgov/about/budget/2015/budget-senate-fyl6.pdf

2^^ Library Of Congress Fiscal 2016 Budget Justification at 1.

previously, as have others, that it may be prudent to review this issue, particularly through
discussions with larger copyright owners.^s

The Office's current organizational structure is under strain because the copyright system
has evolved and because digital advancements have changed the expectations of the public.
The Committee explored these themes at its February 2015 hearing, and at the request of
the Ranking Member, I provided my views regarding the hearing testimony, specifically
whether and how the Office might be modernized to operate with greater legal and
operational independence. There, 1 explained that the Office serves an economically
significant marketplace, requires a sophisticated technology enterprise, has funding needs
that are distinct from the Library's, and would benefit from the kind of management
authority that would allow an expert staff to adapt nimbly and responsibly to the changing
landscape. A new structure must be consistent with the constitutional requirements that
have been identified by Members of Congress, the courts, and legal experts, and it should
respect the century-old tradition of the Office providing expert legal interpretation and
impartial policy advice to both Congress and federal agencies.^^

Difficulties have been most pronounced in the area of information technology. Witnesses
have stressed the importance of technology to the proper administration of the copyright
law, points well known to myself and my staff. 2*^ As mentioned above, 1 prioritized
technology concerns early in my tenure and commissioned stakeholder feedback and a
major report on these issues. Moreover, consistent with the advice we received from users
as well as public interest organizations, 1 created and filled the position of Chief

FY16 Library of Congress & Architect of the Capitol Budget: Hearing Before the Subcomm. on the Legis. Branch
of the S. Comm, on Appropriations, 114th Cong, (prepared statement of Maria A. Pallante, Register of
Copyrights and Director of the IJ.S, Copyright Office), available or http:/ /www.appropriations,
senate.gov/sites/default/riles/hearings/031715%20LOC%20Register%20of%20Copyrights%20Testimony
%20-%20LegBranch.pdf (at 11) (concluding that the Copyright Office would benefit from more flexibility in
both its retention and spending of fee revenues, partiailarly in reiation to longer-term capital improvements);
U.S. Copyright OJ)7ce: Its Functions and Resources at 52 (2015) (testimony ofRobertBrauneis, Professor,

George Washington University Law School) (recommending that "Congress explicitly authorize the Copyright
Office to collect fees that cover capital investments and to build a reserve fund that is not depleted annually
by an adjustment to the Office's appropriation").

^^See Letter from Maria A. Pallante, Register of Copyrights and Director of the U.S. Copyright Office, to Rep.
John Conyers, Jr., Ranking Member, H, Comm, on the judiciary (Mar. 23, 2015), available at
http://copyright.gov/laws/testimonies/022615-testimony-pallante.pdf [discussing benefits of an
independent agency structure for copyright functions).

See id.

2^ See, e.g., U.S. Copyright Office: Its Functions and Resources oX. 24 (statement of Lisa A. Dunner, Partner,

Dunner Law PLLC, on behalf of the Section of Intellectual Property Law of the American Bar Association)

('The Copyright Office needs a sophisticated, efficient IT system responsive to its needs and those of its
users.’’).

2^ See, e.g., MICHAEL WEINBERG ET AL., PUBLIC KNOWLEDGE, A COPYRIGHT OFFICE FOR THE 2 1ST CENTURY:
Recommendations to the New Register of Copyrights (2010), available at https://www.publicknowledge.org/
files/docs/ACopyrigh tOfficeforthe21stCentury.pdf; Pamela Samuelson & Members of the Copyright Principles
Project, The Copyright Principles Project: Directions for Reform, 25 Berkeley Tech. L.J. 1175, 1205 [2()1())

Information Officer within the Copyright Office, not merely to better coordinate with the
Library's central IT department, but to ensure that the Office plays more of a direct role in
the targeted planning and development that is necessary. My goal is to empower the
Copyright Office CIO to build a professional team that is both fully conversant in up-to-date
technology and standards, and fully integrated into the actual business of the Copyright
Office. I believe that the Copyright Office can and should operate leanly, but at least a third
of the Register's future staff should be experts in technology, data standards, and
information management concerns.

Notwithstanding the logic of building a tech-savvy copyright staff, and the loud support of
copyright stakeholders for this vision, auditors have advised the Library to move in the
opposite direction, i.e., to correct general weaknesses in its core operations, it should exert
more direct control and decision making over its departments, including with respect to
technology.^" The impact of this strategy on the Register's statutory authority is unknown,
but requires serious analysis to avoid diluting or compromising the singular goals of the
copyright system.

Moreover, the Library's technology governance and capabilities are seriously and
systematically deficient.^i And though the Library may well make incremental
improvements, it is difficult to see how further centralization of the Copyright Office needs
will facilitate the flexible and efficient copyright system we urgently need to create . ■'*2 The
mission of the Copyright Office is fundamentally different from the mission of the Library,
and 1 believe that the Copyright Office must have its own CIO, technology staff, and
management autonomy, including the ability to implement IT investment and planning
practices that focus not on agency-wide goals but on its own specific mission.^^ As noted in

(recommending that the Office develop additional policy expertise and research capabilities in the areas of
economics and technology],

™ See, e.g., UNITED States Government Accountability Office, LibraryofConcress: Stronc Leadership Needed
TO Address Serious Information technology Management Weaknesses 96-100 (2015), available at
http://copyright.gov/technology-reports/reports/gao-lc-report-2015.pdf (recommending that the Library
hire a permanent CIO responsible for the Library's information technology agency-wide),

See generally Id.

33 See U.S. Copyright Office: Its Functions and Resources at 43 (statement of Nancy], Mertzel, Schoeman Updike
Kaufman & Stern LLP, on behalf of the American Intellectual Property Law Association) ("As the [Copyright
Office's] technical upgrades report explains, '[t]he Office’s technology infrastructure impacts all of the Office's
key services and is the single greatest factor in its ability to administer copyright registration, recordation
services, and statutory licenses effectively.' Yet, the Copyright Office does not control its technology. Rather,
it is controlled by the Library of Congress, and housed on the Library’s servers. In fact, even equipment
purchased by the Copyright Office with its appropriated funds, is controiled by the Library. Additionaily, the
Office is dependent upon the Library s IT staff. However, the Library IT staff has other responsibilities, and is
not well-versed in the needs of the copyright community. AlPLA urges this Committee to explore ways to give
the Copyright Office greater autonomy over its IT infrastructure and services." (citations omitted)).

33 In completing the Technical Upgrades Report mentioned previousiy, the Copyright Office CIO and project
team recommended, among other things, that the Office have a separate enterprise architecture and
technologicai infrastructure. .S'ee U..S. COPYRIGHT OFFICE, Report and Recommendations of the Technical

my prior testimony to this committee, the Copyright Office sits at the center of a dynamic
marketplace in which creative content drives a sophisticated chain of business in the
information and entertainment sectors.

A faster and more nimble Copyright Office must be a priority.

III. POLICY ISSUES THAT ARE READY FOR LEGISLATIVE PROCESS

Based upon the past two years of congressional review, as well as the extensive research
and study of my own staff, 1 believe the following issues are ripe for action, meaning that
Congress has at its disposal the necessary legal analysis and a clear public record. If the
Committee is prepared to act, it is in a strong position to develop legislation.

Music Licensing

The United States has the most innovative and influential music culture in the world. But
music creators and users are struggling with outmoded licensing practices — many of them
government-mandated — that have not kept step with the digital age. As is recognized by
industry participants on all sides, we need to fix this broken system.

This Committee has long recognized the need to update the copyright laws governing the
music marketplace. Nearly a decade ago, Representative Smith, then-Chairman of the
Subcommittee on Courts, the Internet, and Intellectual Property, observed: "The laws that
set out the framework for the licensing of musical rights in [the music] industry are
outdated, and some say beyond repair.”^'* Similar views have been expressed by many
other Members during the current copyright review.^''

Upgrades Special Project Team [2015), available at http://copyrlght.gov/docs/technical_upgrades/usco-
technicalupgrades.pdf. When the Senate Legislative Branch Appropriations Committee requested the
Government Accountability Office to review the Library’s technology, it referenced the Office’s request for
public comments on technology. SeeS. RHP. No. 113-196, at 40 {ZQIA’]. available crthttps://www.congress.gov
/113/crpt/srptl96/CRPT-113srptl96.pdf.

34 Copyright Office Views on Music Licensing Reform: Hearing Before the Subcomm. on Courts, the Internet, &
Intellectual Prop, of the H. Comm, on the judiciary, 109th Cong. 1 (2005) [statement of Rep, Lamar Smith,
Chairman, Subcomm. on Courts, the Internet, & Intellectual Prop.).

35 See, e.g., Music Licensing Under Title 1 7 [Part / & II): Hearing Before the Subcomm. on Courts, Intellectual
Prop., & the Internet of the H. Comm, on the Judiciary, 113th Cong. 1 (2014) (statement of Rep, Howard Cohle,
Chairman, Subcomm. on Courts, Intellectual Prop., & the Internet) ("[T]he current licensing system hasn’t
changed. Many feel that our music licensing laws were designed for a world that existed decades ago and
have become outdated."); id. at 3 (statement of Rep. Bob Goodlatte, Chairman, H. Comm, on the Judiciary)
("Interested parties from across the spectrum have recognized a need for changes in how our nation’s
copyright laws, as they pertain to music, are structured."); id. at 4 (statement of Rep. jerrold Nadler, Ranking
Member, Subcomm. on Courts, Intellectual Prop., & the Internet] ("Unfortunately, the existing landscape is
marred hy inconsistent rules that place new technologies at a disadvantage against their competitors and
inequities that deny fair compensation to music creators.").

Last year, the Copyright Office undertook a comprehensive study to assess the impact of
copyright law on the music marketplace. The Office's resulting report^® is very highly
regarded, and has been characterized in the media as "a rare instance of a government
agency getting out in front of moving technology."^? Stakeholders across the spectrum
have been similarly impressed.^^ While there is probably no single constituent that agrees
with every conclusion of the report, it is widely viewed as an enormous step forward
toward a more equitable and rational system.

In the report, the Office suggests a series of balanced changes to our government processes
to promote more efficient licensing practices, greater parity among competing platforms,
and fair compensation for creators.^^ We recommended greater free market activity while
preserving the benefits of collective licensing for those smaller actors who may still need to
rely upon it. The report also reflects the Office's longstanding view that the United States
must join other developed nations in recognizing a full public performance right for sound
recordings. In addition, consistent with our earlier report to Congress on pre-1972
recordings, it affirms that we should bring pre-1972 sound recordings under federal
copyright protection.'^® The groundwork has thus been laid for a follow-on process, under
the oversight of this Committee, to develop comprehensive legislation to modernize our
music licensing laws.

U.S. Copyright Office, Copyright andthe Music Marketplace [2015), available at http://copyright.gov/
policy/musiclicensingstudy/copyright-and-th e-music-marketplace.pdf,

Miles Raymer, The U.S. Copyright Office Wants to Update Our Music Licensing Laws, Entertainment Weekly
[F eb. 5,2015).

38 For example, Pandora applauded the Office’s call for transparency, SAG-AFTRA commended the Office's
"call for broad reform to make music licensing work better for everyone," and SoundExchange remarked that,
"the report contains a weaith of ideas and proposals, all of which will surely help spur discussion and
hopefully inspire movement towards a better path forward for the entire industry." Glenn Peoples, 'A Lot to
Digest': The Industry Reacts to Proposed Music Copyright Changes, Billboard [Feb. 6, 2015), http://www,
billboard.com/articles/6465427/industry-reactions-copyrlght-muslc (reflecting statement of Dave Grimaldi,
Pandora Director of Public Affairs); Press Release, SAG-AFTRA, SAG-AFTRA Statement on the Release of the
Report "Copyrights and the Music Marketplace" (Feb. 4, 2015), available at http://www.sagaftra.org/press-
releases/fehruary-05-2015/sag-aftra-statement-release-report-%E2%80%9Ccopyrigh ts-and-music-
marketplace; Press Release, SoundExchange, SoundExchange Response to U.S. Copyright Office Proposed
Reforms to Music Licensing System [Feb. 5, 2015), avof/aWe at http://www.soundexchange.com/pr/
soundexchange-response-to-u-s-copyright-office-proposed-reforms-to-music-licensing-system/.

3'^ Copyright AND the Music Marketplace at l-ll.

40 See Music Licensing Under Title 1 7 at 247 [statement of Cary Sherman, Chairman and CEO, Recording
Industry Association of America) [calling on Congress to "make sure artists who are recorded before 1972 are
paid"): id. at 344 (statement of Michael Huppe, President and CEO, SoundExchange Inc.) ("Congress must
address the current royalty crisis facing legacy artists with recordings made before 1972."); id. at 390
[statement of David J. Frear, Chief Financial Officer, SiriusXM Holdings Inc.) ("I would be supportive of closing
Che loophole Chat Mr. Conyers referred to. Thatloophole includes terrestrial radio, as well as pre-72."); id. at
407 [statement of Chris Harrison, Vice President, Business Affairs, Pandora Media Inc.) ("Pandora would be in
favor of following the Copyright Office's recommendation, which is fully federalizing pre-72 recordings to
allow both consumers to benefit from the protections, like fair use under the Copyright Act, allow recording
artists to exercise their rights to terminate their transfers.").

Meanwhile, the Department of Justice continues to review one aspect of the music
landscape, namely, the judicially-imposed consent decrees that govern the authority and
licensing practices of the two largest performing rights societies, ASCAP and BMI. By all
accounts, the DO] process could continue for several months or longer and even then will
face a process of judicial review. While the DOJ’s input is critical, it is this Committee that
enjoys plenary responsibility for music copyright issues. The Committee may have its own
views on how best to address issues relating to the consent decrees, which are intertwined
with many other music licensing concerns that are not before the DOJ. While the ongoing
DOJ process — and any eventual outcome of that process — are certainly relevant to the
discussion, legislative work to modernize our music licensing system should be on the very
near horizon.

Small Claims

The problem of copyright small claims is ready for a legislative solution. As Representative
Coble noted in the July 2014 hearing, “[ajs much as larger copyright owners find the civil
litigation system expensive, smaller copyright owners find it not worth their time or money"
to pursue infringement remedies through litigation.'" As a result, "[hjaving to choose to go
out and earn income by working or staying home to consider contracting an attorney to file
a lawsuit on their behalf that they cannot afford in the first place is not much of a choice at
all.’"'2 And as Representative Chu noted, "[AJlthough we use the term 'small claims,' often,
really, these claims are not small to the individual creator whose livelihood is being
threatened by the theft of their work and property .”'*3

The Committee identified the problem of small copyright claims as far back as 2006,
holding a hearing focused on the possible alternative dispute resolution systems such as a
copyright "small claims court."'''' Then, in 2011, the Committee asked the Copyright Office
to conduct a detailed study of the problem of small copyright claims, and recommend
appropriate legal changes to improve the adjudication of such claims.

The Copyright Office's 2013 report to this Committee highlighted the daunting challenges
faced by copyright owners seeking to pursue small copyright claims through the federal
court process, and recommended the creation of an alternative, administrative tribunal.'*^

See Copyright Remedies: Hearing Before the Subcomm. on Courts. Inteilectua! Prop., & the Internet of the H.
Comm, on the Judiciary, 113th Cong. 2 (2014) (statement of Rep. Howard Coble, Chairman, Subcomm. on
Courts, Intellectual Prop., & the Internet).

Id.

Id. at 98 (statement of Rep. Judy Chu).

See Remedies for Small Copyright Claims: Hearing Before the Subcomm. on Courts, the Internet, & Intellectual
Prop, of the H. Comm, on the Judiciary, 109th Cong. (2006).

45 u.S. Copyright Office, Copyright SmallClaims 4 (2013), avazVafe/e at http://www.copyright.gov/docs/
smallclaims/usco-smallcopyrightclaims.pdf.

As reflected in the draft legislation appended to our report, the tribunal would be a wholly
voluntary alternative to federal court, focused on small infringement cases valued at no
more than $30,000, and it would award damages in non-precedential decisions, with no
injunctive powers.^'' Like the Register of Copyrights and Copyright Royalty Judges, the
small claims adjudicators would be inferior officers and would therefore need to be
appointed by, and operate under the supervision of, the Librarian of Congress, who is a
principal officer of the United States accountable to the President of the United States.'*^

Felony Streaming

It is time for Congress to bring the criminal penalties for unlawful streaming in line with
those for other criminal acts of copyright infringement, an issue that has been emphasized
by those responsible for enforcement of our laws.

The Department of Justice has stressed that "[t]o deter pirate streaming websites from
illegally profiting from others' efforts and creativity, the Administration recommends that
Congress amend the law to create a felony penalty for unauthorized Internet streaming."''®
The Copyright Office also has testified as to the importance of this issue"*® and the U.S.
Intellectual Property Enforcement Coordinator agrees.®®

Currently, criminals who engage in unlawful internet streaming can only be charged with a
misdemeanor, even though those who unlawfully reproduce and distribute copyrighted
material can be charged with a felony. This distinction makes no sense. As streaming
becomes a dominant method of obtaining content online, unlawful streaming has no less of
an adverse impact on the rights of copyright owners than unlawful distribution.

While Congress should carefully considerthe operation of this amendmentto ensure
appropriate legal processes, there is no question that the change is warranted and overdue.

«See M at 133-54.

See generally Intercollegiate Broad. Sys., Inc. v. Copyright Royalty Bd.. 684 F.3d 1332 [D.C. Cir. 2012).

Copyright Remedies at 24 [statement of David Bitkower, Acting Deputy Assistant Att'y Gen., Grim. Div., U.S.
Dep’tofiusticeJ.

See generally Promoting Investment and Protecting Commerce Oniine: The ART Act. the NET Act and Illegal
Streaming: Hearing Before the H. Subcomm. on Intellectual Prop.. Competition. & the Internet of the H. Comm, on
the fudiciary, 112th Cong. (2011) (statement of Maria A. Pallante, Register of Copyrights and Director of the
U.S. Copyright Office].

“ Intellectual Property Enforcement Coordinator, Administration’s White Paper on Intellectual Property
Enforcement Legislative Recommendations 2 [2011], available at https;//www. whitehouse.gov/sites/
default/files/ip_white_paper.pdf (’’The Administration recommends three legislative changes to give
enforcement agencies the tools they need to combat infringement [including to] [cjlarify that, in appropriate
circumstances, infringement by streaming, or by means of other similar new technology, is a felony").

Section 108 (Library Exceptions)

We are ready to update the exception that provides a safe harbor for libraries and archives.

Section 108 was enacted in 1976, and tweaked in 1998. Efforts to recalibrate it have been
ongoing over the past ten years. In 2005, the Copyright Office and the National Digital
Information Infrastructure and Preservation Program of the Library of Congress co-
sponsored an independent study group that met for nearly three years and examined every
aspect of the provision, from legislative history to shortcomings and solutions for the next
era. The Group published its extremely comprehensive analysis and a list of partial
recommendations in 2008 during the tenure of my predecessor.®' In 2012, 1 reconvened
the group for a day-long meeting to review the recommendations and to discuss
intervening litigation involving libraries.®^ In 2013, the Office partnered with Columbia
Law School to present a public symposium on Section 108 reform.®'

in its current state. Section 108 is replete with references to analog works and fails to
address the ways in which libraries really function in the digital era, including the copies
they must make to properly preserve a work and the manner in which they share or seek to
share works with other libraries. Witnesses last year testified about both the importance
and the deficiencies of this exception.®'* A former publisher told the Subcommittee that
Section 108 "is so outdated and inadequate as to no longer serve its function."®® A former

" Section 108 Study Group, The Section 108 Study Group Report (2008). The Study Group included a cross-
section of experts and representatives. See Members ofthe Section 108 Study Group, The Section 108 Study
Group, http;//www.sectionl08.gov/menibers.htnil.

See, e.g,, Authors Guild, Inc, v. HathiTrust, 755 F.3d 87 (2d Clr. 201A); Authors Guild, Inc, v, Google, Inc, 721
F.3d 132 (2d Cir. 2013), on remand, 954 F. Supp. 2d 282 (S.D.N.Y. 2013), appeal docketed, No. 13-4829 (2d Cir.
Dec. 23, 2013).

'' See Symposium, Copyright Exceptions for Libraries in the Digital Age: Section 108 Reform, Kernochan Center
for Law, Media, and the Arts, Columbia Law School (Feb. 8, 2013), http://web.law.columbia.edu/kernochan/
symposia/section-108-reform.

See, e,g,, Preservation and Reuse of Copyrighted Works: Hearing Before the Subcomm, on Courts, Intellectual
Prop,, & the Internet of the H. Comm, on the Judiciary, 113th Cong. 28 (2014) (statement of Richard S. Rudick,
Co-Chair, Section 108 Study Group) ("[OJur mission was to re-examine Section 108 (enacted in 1976 to deal
with the then new technology ofthe photocopying machine); to define what it would take to make its
provisions useful and fair in light ofthe evolving impact of digital technologies . . . ."); id, at 6 (statement of
Rep. Boh Goodlatte, Chairman, H. Comm, on theludiciary) ("[L]ike many of the 1976 provisions, section 108 is
woefully outdated for the digital age."); id. at 8 (statement of Gregory Lukow, Chief, Packard Campus for
Audio Visual Conservation, Library of Congress) ("Section 108 needs to be updated for the digital age with
language applicable to all formats.").

'' Id, at 30 (statement of Richard S. Rudick, Co-Chair, Section 108 Study Group); .see also, e.g., THE SECTION 108
Study Group Report at 28 ("Section 108 is out of date and in many respects unworkable in the digital
environment.").

librarian observed that the absence of an adequate exception has led libraries to rely too
heavily on the fair use doctrine.^^

Section 108 has always had a savings clause for fair use, ensuring that both would be
available as appropriate to the libraries and courts that must apply them. The point of
Section 108 is not to negate fair use but rather to provide greater statutory guidance to
those who need it most in the ordinary course of business. As stated by the Chairman of
this Committee, “it is probably true that there are clear-cut cases in which fair use would
apply to preservation activities, [but] fair use is not always easy to determine, even to those
with large legal budgets. Those with smaller legal budgets or a simple desire to focus their
limited resources on preservation may prefer to have better statutory guidance than exists
today."-'’^

Based on the entirety of the record to date, the Office has concluded that Section 108 must
be completely overhauled. One enduring complaint is that it is difficult to understand and
needlessly convoluted in its organization.^^ The Office agrees that the provisions should be
comprehensible and should relate logically to one another, and we are currently preparing
a discussion draft. This draft will also introduce several substantive changes, in part based
upon the recommendations of the Study Group's 2008 report. It will address museums,^^
preservation exceptions'^ and the importance of “web harvesting” activities.^!

■'^See, e.g.,A Case Study for Consensus Building: The Copyright Principles Project at 15 [statement of Lolly
Gasaway, Co-Chair, Section 108 Study Group) ["Sometimes I think academic law librarians and academic
librarians at large institutions, which have legal counsel to advise them, would like to rely solely on fair use

If only copyright lawyers can understand and apply the Act, something is fundamentally wrong."), But

see Preservation and Reuse of Copyrighted Works at 32 (statement of James G. Neal, Vice President for
Information Services and University Librarian, Columbia University) ("My overarching point is that the
existing statutory framework, which combines the specific library exceptions in section 108 with the flexible
fair use right, works well for libraries and does not require amendment").

See Preservation and Reuse of Copyrighted Works at 6 [statement of Rep, Bob Goodlatte, Chairman, H. Comm,
on the Judiciary).

58 See, The Section 108 Study Group Report at ix ("Many practitioners find section l()8's organization
confusing and are not always certain of the relationship among its provisions."); A Case Study for Consensus
Building: The Copyright Principles Project at 15 [Lolly Gasaway, Co-Chair, Section 108 Study Group) [‘The
current act is bewildering, to say the least, often even to copyright lawyers.").

5^ See The Section 108 Study Group Report at 31-33 [recommending that museums be eligible for the Section
108 exceptions).

50 See id. at 69-79 [recommending that certain libraries, archives, and museums be permitted to make a
reasonable number of preservation copies of published and publicly disseminated works).

51 See id. at 80-87 [recommending that libraries, archives, and museums be permitted to capture and preserve
"publicly available" online works); see also id. at 85-87 [explaining how rightsholders can opt out of having
their online works captured and/or preserved, under the Study Group's recommendation).

Orphan Works

Orphan works is ripe for a legislative solution.

The United States has studied and debated both the problem of orphan works and a variety
of potential solutions for more than a decade, starting with a 2005 request from Senate and
House Judiciary Leadership for a formal Copyright Office study. This study led to a Report
we published in 2006.^2 jn October 2012, we reopened our study of orphan works, to
assess changes in the business and legal landscapes, this time pairing it with an equally
complex study of mass digitization, fair use, and licensing. In addition to our own research
into domestic and foreign developments, we solicited several rounds of comments over a
two-year period, and held two days of public hearings in 2014.<>2

As before, the Copyright Office favors a legislative framework in which liability is limited or
eliminated for a user who conducts a good-faith, diligent search for the copyright owner,
similar to the approach set out in the Shawn Bentley Orphan Works Act passed by the
Senate in 2008. We also have considered recent technological changes that provide some
additional online tools in the quest to find owners, as well as legal issues regarding how to
best make a record of orphan uses.

The public dialogue on orphan works over many years has confirmed that too many works
languish in legal uncertainty. Moreover, this kind of marketplace gridlock — the kind
caused by an absent or nonexistent copyright owner — does not serve the overall objectives
of the copyright law. Indeed the public record has shown that many good-faith users will
choose to forgo use of an orphaned work entirely rather than face the prospect of costly
litigation.'''^ As in the case of filmmakers, they are unable to risk "lawsuits, injunctions, and

“2 See United States Copyright Office, Report on Orphan Works (2006), available at http;//www.copyright.
gov/orphan/orphan-report.pdf; see also Promoting the Use ofOrphan Works: Balancing the Interests of
Copyright Owners and Users: Hearing Before the Subcomm. on Courts, the Internet, & Intellectual Prop, of the H.
Comm, on the judiciary, llOCh Cong. (2008); Shawn Bentley Orphan Works Actof 2(}(}8, S. 2912, 1 Kith Cong.
(2008).

For the complete docket of the current Copyright Olfice study on Orphan Works, including written
comments, hearing transcripts, proposed legislation, and written testimony, .see http://copyright.gov/
orphan/.

See, e.g., Preservation and Reuse of Copyrighted Works at 81 (statement of Michael C. Donaldson,
International Documentary Association and Film Independent] ("Donaldson Statement") ("[Njarrative
filmmakers often seek to use orphan works to create adaptations, sequels, or remakes. That's not a fair use.
Filmmakers must license such third party materials, but are unable to do so when the rightsholder to those
materials cannot be identified or located. Filmmakers cannot even begin their projects because no rights can
be obtained."): Promoting the Use of Orphan Works: Balancing the Interests of Copyright Owners and Users at
33 (written statement of Allan Adler, Vice President for Legal & Government Affairs, Association of American
Publishers] (". . . book publishers fully understand the frustration that can arise when the desire to
incorporate a third-party work as part of a new work being prepared for publication is thwarted by a concern
over potential infringement liability based noton the copyright owner's refusal to authorize such use of the
third-party work but on the inability of the publisher — or author — of the new work to identify or locate that
copyright owner in order to request the permission that is necessary to legally make the intended use.").

catastrophic damages.''®^ The orphans problem is of paramount concern for the libraries,
archives, and museums that collect and preserve critically Important works.®® A significant
part of the world's cultural heritage may be falling into a ''20th-century black hole,"®^
unavailable to the public for enjoyment or sodal utility.®®

An issue as complex as orphan works requires congressional attention because there are
numerous and competing equities at stake, equities that cannot be reconciled through
litigation or voluntary measures. Although orphan works are a clear problem, it is also true
that authors, copyright owners and their heirs enjoy exclusive rights under the Copyright
Act. While we should be cautious when constraining these rights, good-faith users need
some way to bridge the legal gaps that arise when dealing with orphan works so they can
address the liability, indemnification, and insurance requirements upon which routine
transactions depend. Multiple foreign jurisdictions,®'* and even U.S. courts, have made
these observations.™

Donaldson Statement at

See Preservation and Reuse of Copyrighted Works <it 11 (statement of Gregory Lukow, Chief, Packard
Campus for Audio Visual Conservation, Library of Congress) ("The dilemma of orphan works plagues
audiovisual collections daily,"); Promoting the Use of Orphan Works: Baiandng the Interests of Copyright
Owners and Users at 66 (written statement of Karen Coe, Associate Legal Counsel United States Holocaust
Memorial Museum) ("If a work is historically or culturally unique, we might allow it to be used but in doing so
we expose the Museum to an unknown liability. Even If the risk Is minimal, we do have to account for the fact
that only one lawsuit or one public allegation of Infringement could have a permanent, negative impact on the
institution, Thus even a minimal, unknown risk has a chilling effect on all our decisions regarding the use of
orphan works."),

67 MAURlZIOBORdHIANDSTAVROULA KARAPAPA, COPYRIGHT AND MASS DIGITIZATION 70 (2013) (citing james Boyle, A
Copyright Black Hole Swahows our Culture, Financial TiMRS, (SepL 6, 2009), availohle of http://www.ft.com/
cms/s/0/6Blla9d4-9h0f-llde-a3al-0()144feabdc0.htmI):.see also Rebecca J. Rosen, The Missing 20th
Century: How Copyright Protection Makes Books Vanish, THE ATLANTIC [Mar. 30, 2012), available at
http://www.theatlantic.eom/technology/archive/2012/03/the-missing-20th-century-how-copyright-
protection-makes-books-vanish/255282/; Society of American Archivists, Comments Submitted in Response
to U,S. Copyright Office's Oct. 22, 2012 Notice of Inquiry at 4, avo//oWe at http://copyright.gov/orphan/
comments/noLl0222012/Society-American-Archivists.pdf ("[T]he unfortunate result of [archivists'] caution
is that the scope of online cultural resources that could be used for new studies and innovation is much
smaller than it ought to he, and would be if an orphan works exception were recognized in the statute.").

6*^ See, e.g., Institute for Intellectual Property and Social justice, Comments Submitted in Response to U.S.
Copyright Office's Oct. 22, 2012 Notice of Inquiry at 1, available othttp;//copyright.gov/orphan/comments/
noi_10222()12/lns titute-for-lntellectual-Property-and-Social-Iustice.pdf ["many orphan works nevertheless
remain out of print and largely unavailable to the public, manifesting the greatest obstacle to copyright social
utility in the developed world"),

69 See, e.g., Directive 2012/28, of the European Parliament and of the Council of 2S October 2012 on Certain
Permitted Uses ofOrphan Works, 2012 O.j. (L 299) 5; Copyright Act, R.S.C. 198S, c. C-42, § 77 (Can.); 1999. evi
LXXVI, tbrveny a szerzoi jogrol (Act LXXVI of 1999 on Copyright), §§ 41/A - 41/K (Hung.) (translation
unavailable); Chosakuken Hb [Copyright Law], Law No. 48 of 1970, as amended up to Law No. 43 of 2012, arts.
67-73 (Japan), translated at http://wvw,cric.or.jp/english/clj/doc/20130819_July,2013_Copyright_Law
_of_Japan.pdf (unofficial translation); Jeojakkwonbeop [Cop 5 might Act], Act No. 432, Jan. 28, 1957, amended up
to Act No. 12137, Dec. 30, 2013, art. 50 (S. Kor.), £rfln.s/otedot http://elaw.klri.re.kr/eng_service/lawView.do?
hseq=32626&lang=ENG (unofficial translation); Copyright Law, Promulgated hy Royal Decree No. M/41 of 2

The Copyright Office continues to believe that an orphan works framework should be a
supplement to other available provisions in the law that may be applicable, including the
ability of a user to assert the doctrine of fair use as an affirmative defense in any given
instance. However, fair use is not a complete solution in this context. It provides no
industry-appropriate instruction as to how diligently a user must search for a copyright
owner [e.g., for a photographer, writer, or television producer) before declaring that
person missing,^’ and it lacks a standard as well as a mechanism by which the user would
have to pay the emerging copyright owner when such payment is legally appropriate. For
all of these reasons, the Office believes the orphan works problem is a legislative priority.

Resale Royalty

The time is ripe for a legislative decision on the issue of resale royalties for visual artists.

The Copyright Office first issued a report on the topic in 1992, and recommended against
adopting a resale royalty right. In 2013, however, the Office issued an updated analysis of
resale royalty rights in the United States. As part of that update, the Copyright Office
concluded that certain visual artists operate at a disadvantage under the copyright law

Rajab, 1424, Aug. 30, 2003, art 16 [Saudi Arabia), trans/ated at http://www.wipo.int/wipolex/en/
text.jsp?file_id=129516 (unofficial translation); Copyright and Rights in Performances (Licensing of Orphan
Works] Regulations, 2014, S.I. 2014/2863 (U.K.).

See Authors Guild v. Google, Inc., 770 F. Supp. 2d 666, 677 (S.D.N.Y. 2011) (“The questions of who should be
entrusted with guardianship over orphan books, under what terms, and with what safeguards are matters
more appropriately decided by Congress than through an agreement among private, self-interested parties.").

See, e.g., Preservation and Reuse of Copyrighted Works at 3 (2014) (statement of Rep. Jerrold Nadler,

Ranking Member, Subcomm, on Courts, Intellectual Prop., & the Internet) ("Ongoing uncertainty regarding
how to deal with orphan works also played a part in a related case brought by the Authors Guild against
HathiTrust where the inability of several universities to create a procedure that accurately identified orphan
works resulted in suspension of efforLs to digitize these works. This would seem to confirm that orphan
works continue to be a problem in need of a solution, and I look forward to hearing from our witnesses on
what we should do."); id. at 55 [testimony of Jan Constantine, General Counsel, The Authors Guild, Inc.)

("HathiTrust sidestepped Congress and started its own orphan works project Congress has carefully

crafted rules for copying, including detailed rules for library copying. Ad hoc approaches to things as
momentous as mass digitization of books or the distributingofso-called orphan books is wildly
inappropriate."); Transcript, U.S. Copyright Office, Public Roundtable on Orphan Works and Mass Digitization
101:14-17 [Mar. 10, 2014), available at http://copyright.gov/orphan/transcript/0310LOC.pdf [statement of
Sarah Michalak, HathiTrust Digital Library) [regarding the orphan works aspect of the HathiTrust Digital
Library: "However, the process was — the project was curtailed because it was discovered to he an erroneous
approach to finding — to identifying rights.").

An artist resale royalty provides artisLs with an opportunity to benefit from the increased value of their
works overtime by granting them a percentage of the proceeds from the resale of their original works of art.
U.S. Copyright Office, Resale Royalties: An Updated analysis 2 (2013), available at http://copyright.gov/
docs/resaleroyalty/usco-resaleroyalty.pdf.

73 U.S. Copyright Office, DR(7/rDE5i//r£; The Artist's Resale Royalty xv-xvi (1992), available athttp:/ /www.
copyright,gov/history/droit_de_suite,pdf.

relative to authors of other types of creative works. Visual artists often do not share in the
long-term financial success of their works because — unlike books, films, and songs, which
frequently generate additional income through their reproduction and wide
dissemination — works of visual art typically are valued for their singularity and scarcity.^^
Consequently, in many instances only the initial sale of a work of visual art inures to the
benefit of the artist, and it is only collectors and other purchasers who reap any increase in
that work’s value over time. Thus, without a resale royalty, “many if not most visual artists
will not realize a benefit proportional to the success of their work.’'^-'"’ The Office also
highlighted the fact that more than seventy foreign countries — twice as many as in 1992
when the Copyright Office issued its first report on the topic — have enacted a resale royalty
provision of some sort.'^^’

The Office's report concluded that there are sound policy reasons to address this inequity,
but also noted that the administrative and enforcement costs of a resale right might be
substantial. Thus, the Office suggested that, in addition to a resale royalty right. Congress
may wish to consider a number of possible alternative or complementary options for
supporting visual artists within the broader context of art industry norms, art market
practices, and other pertinent data. In the report, and in subsequent testimony before the
Subcommittee on Courts, Intellectual Property, and the Internet, the Office provided some
specific recommendations for any legislation in this area.'^^ Several of these
recommendations have been included in a recent bill introduced by Representative
Nadler.^^

Due to a work of visual art's unique nature, "[fjor most visual artists . . . the opportunity to generate
additional revenue from a work permanently ends, as a practical matter, with that first sale," Resale
ROYALTIES: AN UPDATED ANALYSIS at 36. In addition to selling copies and entering into licensing arrangements,
non-visual artists enjoy a number of other ways to make profits. For instance, "[a] play will make a profit if
many people come to see it, despite the fact that additional copies are not made for their enjoyment [and] . . .
[plerformers in a concert may play a work from memory without using any copies, yet the entire audience
will buy tickets for the pleasure of hearing it." Shira Perlmutter, Resale Royalties for Artists: An Analysis of the
Register of Copyrights' Report, 16 Colum.-VLAJ.L. &Arts 395, 405 {1991-1992J,

RRSALE ROYALTIES: AN UPDATED ANALYSIS at 32. The Office noted that visual artists don't reap the same
benefits from the exploitation of exclusive rights available to authors in general, and it pointed out that the
Copyright Act does not specifically account for the difference between the market for works of visual art and
markets for other artistic works.

See id., App. E: Selected Countries with Laws Containing Provisions on the Resale Right,

The Office’s legislative recommendations are meant to benefit the greatest number of artists with the least
amount of disruption to the art market. The recommendations include: setting a minimum threshold value
within the $1,000 and $5,000 range; applying the resale royalty to ‘'work[s] of visual art" as currently defined
in Section 101 of the Copyright Act; and creating a resale royalty rate that falls between 3 and 5%. Id. at 73-
81; see also Moral Rights, Termination Rights, Resale Royalty, and Copyright Term: Hearing Before the
Subcomm. on Courts, Intellectual Prop., & the Internet of the H. Comm, on the judiciary, 113th Cong. 16 [20143
[statement of Karyn Temple Claggett, Associate Register of Copyrights and Director of Policy and
International Affairs, IJ.S. Copyright Office).

American Royalties Too Act of 2015, H.R. 1881, 114th Cong. (2015). The legislation would establish a
resale royalty for visual artworks sold at auction by a person other than the author for $5,000 or more, and

If the Committee is prepared to act on legislation in this area, the foundation is in place.

Improvements for Persons with Print Disabilities

The Office continues to support congressional attention aimed at crafting a digital age
update to exceptions in copyright law for persons who are blind or visually impaired,
although the Office is not offering a specific legislative proposal at this time. It is our view
that the Chafee Amendment, which was first adopted in 1996 and codified in Section 121 of
the Act, would benefit from immediate attention through a legislative process. An update
to these provisions would not only reduce the need for judicial intervention in this area,^^
but would better address the current needs of the visually impaired community and
developments in the commercial marketplace.^^

In addition, the Office fully supports swift ratification of the recent Marrakesh Treaty to
Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired or
Otherwise Print Disabled,^^ is currently working with the Administration to achieve
that result. prompt treaty ratification will permit the United States to both send and
receive accessible format copies of works worldwide, thereby harnessing the technological

the royalty amount would be the lesser of 5% of the sale price or $35,000, plus cost-of-living adjustments. Id.
§3.

The principal exception is found in 17 U.S.C. § 121, also known as the Chafee Amendment. See Maria A.
Pallante, The Next Great Copyright Act, 36 Colum.I.L&Arts 315, 332 (2013j (.noting that future discussions
on copyright exceptions and limitations must Include "crafting a digital age Chafee Amendment [for print
disabilitiesj.").

For example, the case of Authors Guild Inc. v. HathiTrust was driven in part by questions of whether the
University of Michigan was an "authorized entity" under the Chafee amendment. The district court ruled that
it was {Authors Guild, Inc. v, HathiTrust, 902 F. Supp. 2d 445, 465 [S.D.N.Y. 2012)j, and the appeals court ruled
that, because fair use covered the defendant's conduct, there was no need to determine if the Chafee
Amendment applied [Authors Guild, Inc. v. HathiTrust, 755 F.3d 87, 103 n.7 (2d. Cir. 20143).

See, e.g., U.S. DEP’T OF EDUC., REPORT OFTHE ADVISORY COMMISSION ON ACCESSIBLE INSTRUCTIONAL MATERIALS IN
Postsecondary Education for Students with Disabilities 27(2011); Copyright Issues in Education and for the
Visually Impaired: Hearing Before the Suhcomm. on Courts, Intellectual Prop., & the Internet of the H. Comm, on
the judiciary, 113 th Cong. 40 (2014) (statement of Scott C. LaBarre, State President, Colorado National
Federation for the Blind) ("But we in this technical revolution have the opportunity to make every single
published work accessible from the beginning. That is the promise that technology holds, and that is what the
copyright system needs to support").

^2 See Copyright Issues in Education and for the Visually Impaired at 40 (statement of Scott C, LaBarre, State
President Colorado National Federation for the Blind) ("We strongly urge the United States Senate and, if it
comes as an executive agreement this House to ratify and adopt the Marrakesh Treaty.’’),

^3 The Office is also working with the Administration for swift ratification of the Beijing Treaty on Audiovisual
Performances.

advances of the digital age and providing huge benefits for visually impaired persons here

and abroad.^4

Section 1201 (Regulatory Presumption for Existing Exemptions]

The public record supports amending Section 1201 to make it easier to renew exemptions
that have previously been adopted and are in force at the time of the triennial rulemaking
proceeding.^5 As reflected in the September 2014 hearing before this Committee, a wide
range of stakeholders have expressed frustration that the Section 1201 statutory
framework requires that, to continue an existing exemption, proponents must bear the
legal and evidentiary burden of justifying the exemption anew in each subsequent
rulemaking proceeding.^^’

The Copyright Office agrees that the process of renewing existing exemptions should be
adjusted to create a regulatory presumption in favor of renewal. Thus, it would be
beneficial for Congress to amend Section 1201 to provide that existing exemptions will be
presumptively renewed during the ensuing triennial period in cases where there is no
opposition. Additionally, we believe that other aspects of Section 1201 warrant further
study and analysis, and address these in the next section of this testimony.

IV. POLICY ISSUES THAT WARRANT NEAR-TERM STUDY AND ANALYSIS

In this section, we address those copyright issues that are important to a twenty-first
century copyright system, but require more foundational study and analysis. These issues

n4 ‘'[T]he rapid entry into force of the Marrakesh Treaty to Facilitate Access to Published Works for Persons
Who Are Blind, Visually Impaired or Otherwise Print Disabled (The Marrakesh VIP Treaty), concluded in June
2013, will affect the lives of [an estimated 6 million children around the globe with visual impairment] and
generally improve equality of access to knowledge and Information." Catherine Jewell, Removing Barriers to
Literacy: How the Marrakesh VIP Treaty Can Change Lives, WlPO Magazine at 16 (Feb, 2015], available at
http://www.wipo,int/export/sites/www/wlpo_magazlne/en/pdf/2015/wipo_pub_l 21_2015_01.pdf,

ys Legislation has recently been introduced on this Issue. Breaking Down Barriers to Innovation Act of 2015,

S. 990, 114th Cong. (2015); Breaking Down Barriers to Innovation Act of 2015, H.R. 1883, 114th Cong, (2015).

Chapter 12 of Title 1 7: Hearing Before the Subcomm. on Courts. Intellectual Prop., & the Internet of the H.
Comm, on the Judiciary, 113 th Cong. 19-20 (2014) (statement of Mark Richert, Director of Public Policy,
American Foundation for the Blind) [“[W]e we urge Congress to take action to relieve the burden of
repeatedly seeking re-approval of uncontroversial exemptions like the one we must re-propose during each
review,”]. Representatives of copyright owners likewise agreed that the process of renewing uncontroversial
exemptions could be streamlined. Id. at 64 (statement of Christian Genetski, Senior Vice President and
General Counsel, Entertainment Software Association) ("I think that we all share the frustration expressed by
Mr, Richert in his testimony about the need to return repeatedly and use extensive resources to seek a
renewal of an exemption where no one Is opposing the exemption."); id. at 79 (statement of Jonathan Zuck,
President, ACT | The App Association] (“I certainly think that the renewal process of an exemption is
something that could be modified and streamlined especially when there are no objections to that renewal
which is very often the case,"); id. at 125 [written statement of Allen Adler, General Counsel & Vice President
for Government Affairs, Association of American Publishers) (noting that "stakeholders broadly agree that
reauthorization of non-controversial exemptions could be more efficient").

have been repeatedly referenced or addressed by Members of Congress, the Copyright
Office, other agencies, academics, and stakeholders. In the view of the Copyright Office, it is
time to study these issues to document technological and business developments, analyze
court opinions, review stakeholder perspectives, and provide a sufficient foundation for
Congress. The Copyright Office is available, as always, to assist Congress in this regard.

Section 1201 (Other Issues)

There are a number of Section 1201 issues that are not yet ripe for legislative action but
would benefit from a focused legal and policy analysis at this time.

It should be recognized at the outset that the anticircumvention provisions in Section 1201
have played an important role in facilitating innovation and providing consumers with a
wide range of content delivery options. As Representative Marino observed in the June
2014 hearing on chapter 12, “[t]he digital economy has enabled wide distribution of
movies, music, eBooks and other digital content,” and ''[cjhapter 12 seems to have a lotto
do with [that] economic growth.”'’^ Representative Nadler made the same point, noting
that the anticircumvention provisions have "been successful by promoting the creation of
many new legal online services in the United States that consumers use to access movies
and TV shows. A witness representing mobile app developers likewise remarked that
"[tjhe explosive growth in technological innovations and content delivery options prove
that the DMCA has created an environment in which these things are possible."®'^ Many of
our free trade agreements also include anticircumvention provisions.

But while Section 1201 has been a success in many respects, experience since its
enactment in 1998 has revealed issues that call for examination. The Copyright Office has
done what it can within the existing statutory framework to consider the frustrations of
stakeholders and revise the triennial rulemaking process to make it more accessible and
understandable to the public. I believe we have been successful in this effort. During the
current Section 1201 rulemaking proceeding, we are considering twenty-seven proposed
exemptions, with respect to which we have so far received almost 40,000 comments from
the public.

Id. at 2 [statement of Rep. Tom Marino, Vice Chairman, Subcomm, on Courts, Intellectual Prop., & the
Internet).

Id. at 2 (statement of Rep. jerrold Nadler, Ranking Member, Subcomm. on Courts, Intellectual Prop., & the
Internet).

Id. at. 21 [statement of Jonathan Zuck, President, ACT | The App Association).

See. e.g., United States-Korea Free Trade Agreement, U.S. Kor., art. 18.4, para. 7, Apr. 1, 2007, 46 I.L.M. 642
(May 2007) (entered into force Mar. 15, 2012), available at https://ustr.gov/trade-agreements/free-trade-
agreements/korus-fta/final-text; United States-Australia Free Trade Agreement, IJ.S.-Austl, art. 17.4, para. 7,
May 18, 2004, 43 I.L.M. 1248 (2004) (entered into force Jan. 1 , available at https://ustr.gov/trade-
agreements/free-trade-agreements/australian-fta/final-text; United States-Singapore Free Trade Agreement,
U.S.-Sing., art. 16.4, para. 7, May 6, 2003, 42 I.L.M. 1026 (2003) (entered into force Jan. 1, 2004), available at
https://ustr.gov/trade-agreements/free-trade-agreements/singapore-fta/final-text.

But the rulemaking process nonetheless merits congressional attention. The permanent
exemptions in Section 1201 relating to reverse engineering, encryption research, and
security testing are an ongoing issue, with some stakeholders suggesting that they are too
narrow in scope'^^ and others of the view thatthey strike an appropriate balance.^^ pq^ its
part, the Office has previously highlighted the limited nature of the existing security testing
exemptions and supported congressional review of the problem. We have also, in recent
years, noted that some public policy issues are outside the reach of the rulemaking and can
only be addressed by legislation.^'^

Some stakeholders are concerned that intended beneficiaries of exemptions lack the
practical ability to engage in the permitted circumvention themselves. Others suggest a
disconnect between the original purpose of Section 1201 — protecting access to creative
works — and its effect on a wide range of consumer goods that today contain copyrighted
software.

Finally, consumers have voiced discomfort that Section 1201 prevents them from engaging
in activities, such as the repair of their automobiles and farm equipment, which previously

See, e.g., Erik Stallman, The Current DMCA Exemption Process is a Computer Security Vulnerability, Crnter
FOR Democracy & Technology (jan. 21, 2015),https://cdt.org/blog/the-current-dmca-exemption-process-is-a-
computer-security-vulnerability/.

Chapter 12 of Title 17 at 66 [statement of Christian Genetski, Senior Vice President and General Counsel,
Entertainment Software Association); id at 81 (statement of Jonathan Zuck, President, ACT | The App
Association),

U.S. Copyright Office, Recommendation of the Register of Copyrights in RM 2008-8, Rulemaking on
Exemptions from Prohibition on Circumvention ofCopyright Protection Systems for Access Control
Technologies 205-06 (June 11, 2010), avo?7o/)/eot http://www.copyright.gov/1201/2010/initialed-registers-
recommendation-june-ll-2010.pdf,

'■■‘‘^See, e.g., U.S, Copyright Office, Section 1201 Rulemaking: Fifth Triennial Proceeding to Determine
Exemptions to the Prohibition on Circumvention, Recommendation of the Register of Copyrights 24 [Oct, 12,
2012), available of http://copyright,gov/1201/2012/Section_1201_Rulemaking_2012_Recommendation,pdf
("The Register notes that several provisions in Section 121 appear ill-suited to the digital world and could
benefit from comprehensive review by Congress."); U.S. Copyright Office, Recommendation of the Register of
Copyrights in RM 2002-4; Rulemaking on Exemptions from Prohibition on Circumvention of Copyright
Protection Systems for Access Control Technoiogies 84 (Oct. 27, 2003J, available at http:/ /copyright,gov/

120 1/docs/regis ters-recommendation.pdf (concluding that adoption of "use-based" or "user-based"
exemptions, rather than exemptions focused on a class of works, required "Congressional action").

'-'5 Chapter 12 of Title 17 at 19 [statement of Mark Richert, Director of Public Policy, American Foundation for
the Blind) (noting that any exemption adopted after the triennial rulemaking "will only provide limited relief,
as it leaves unaffected the DMCA's trafficking ban, which prevents us from creating and distributing advanced
tools and services to people with disabilities who don't have the ability to circumvent DRM to make works
accessible on their own.").

See, e.g., id. at 77 [statement of Rep. Blake Farenthold, Member, Subcomm. on Courts, Intellectual Prop., &
the Internet) ["Traditionally, you have been able to buy a thing and do with it what you want, but with some
of these licensing agreements you can’t do with it what you want").

had no implications under copyright law. Various legislative proposals have been
introduced in an effort to address a number of these concerns, and last year Congress
passed the Unlocking Consumer Choice and Wireless Competition Act to broaden the
exemption for cellphone unlocking.^^ It may be time for a broader review of the impact and
efficacy of Section 1201 and its exemption process.

Section 512 (Notice and Takedown and Safe Harbor)

The scope and efficacy of the DMCA safe harbors embodied in Section 512 of the Copyright
Act are an ongoing source of concern and consternation for copyright owners and online
providers. In the nearly twenty years since Congress enacted the DMCA, courts have
stepped in to fill perceived gaps in the statutory framework, often interpreting provisions
in ways that some believe run counter to the very balance that the DMCA sought to
achieve. Accordingly, the Office believes a formal and comprehensive study — to consider
what is working and what is not, along with potential legislative improvements — is
advisable to assess the Section 5 12 system and ensure that it is properly calibrated for the
internet as we know it today. The current online environment is vastly changed from the
bulletin-board era in which Congress enacted the DMCA in 1998.

Section 512 was designed to address the emerging threat of infringement on the internet,
while at the same time providing appropriate safeguards and greater legal certainty for
online service providers. This balanced approach has served both copyright and

Id. at 44 [statement of Corynne McSherry, Intellectual Property Director, Electronic Frontier Foundation]
["From phones to cars to refrigerators to farm equipment, software is helping our stuff work better and
smarter but, if that software is protected by TPMs, repair and recycling of those goods may require
circumvention. Putting repair and recycling at risk is bad for consumers and it’s bad for the environment,"].

See Unlocking Consumer Choice and Wireless Competition Act, Pub. L. No. 113-144, 128 Stat, 1751 [2014];
Unlocking Technology Act of 2015, H.R, 1587, 114th Cong. [2015]; You Own Devices Act, H.R. 862, 114th
Cong. [2015]; Breaking Down Barriers to Innovation Act of 2015, H.R. 1883, 114th Cong. [2015]; Breaking
Down Barriers to Innovation Act of 2015, S. 990, 114th Cong. [2015].

See, e.g., Viacom Int'I, Inc, v. YouTube, Inc, 718 F. Supp. 2d 514, 524 [S.D.N.Y, 2010] [finding that "awareness
of pervasive copyright-infringing, however flagrant and blatant, does not impose liability on the service
provider"]; UMG Recordings, Inc. v. Veoh Networks, Inc., 718 F.3d 1006, 1022 [9th Cir. 2013) [holding that
"merely hosting a category of copyrightable content, such as music videos, with the general knowledge that
one’s services could be used to share infringing material, is insufficient to meet the actual knowledge
requirement under §512[c][l][A][i]’'}; Disney Enters., Inc. v. Hot/ile Corp., No. 11-20427-ClV-WILLIAMS, 2013
U.S. Dist. LEXIS 172339, at *26 [S.D. Fla. Aug. 28, 2013] ("[T]he statute does not focus on the general
characteristics of the network, does not require affirmative action to police content, and does not preclude a
grant of immunity even if the operator knew or should have known of infringement generally."),

Digital Millennium Copyright Act, Pub. L. No. 105-304, 112 Stat 2860 [1998).

101 See H.R. Rep. No. 105-551, pt. 2, at 49-50 [1998] [Section 512 "preserves strong incentives for service
providers and copyright owners to cooperate to detect and deal with copyright infringements that take place
in the digital networked environment At the same time, it provides greater certainty to service providers
concerning their legal exposure for infringements that may occur in the course of their activities,"].

technology stakeholders well during a time of dramatic change online. several

witnesses and Committee Members observed, the safe harbors provided by Section 512
have done much to facilitate the development of the internet, including the creation of
online platforms through which copyright owners can reach new audiences for their
works. And, as Ranking Member Nadler noted, “[t]he notice and takedown system has
resulted in the quick removal of infringing content on countless occasions."^*^^

Nevertheless, witnesses also identified a number of important challenges that seemingly
call for more detailed discussion and consideration. Grammy-award-winning composer
Maria Schneider highlighted the difficulties individual authors face when enforcing their
rights under the current notice and takedown regime, stating that "my livelihood is
threatened by illegal distribution of my work, and 1 cannot rein it in.^^^s Witnesses
described the mounting costs of sending millions of DMCA notices — costs that are borne
both by the senders as well as the online providers who receive them.^'^^ Recently, the U.S,

'^2 See, e.g., Section S12 of Title 17: Hearing Before the Suhcoww. on Courts. Intellectual Prop., & the Internet of
theH. Comm, on the Judiciary, 113th Cong. 16 (2014) (statement of Annemarie Bridy, Alan G, Shepard
Professor of Law, University of Idaho College of Law) ("Bridy Statement") ("[Tlhe balancing of interests
struck in Section 512 is both sound copyright policy and sound innovation policy."); id. at 42 (statement of
Katherine Oyama, Senior Copyright Policy Counsel, Google Inc.) ("Oyama Statement") ("Google's experience
shows that the DMCA's notice and takedown system ofshared responsibilities strikes the right balance in
promoting innovation and protecting creators’ rights online."); id. at 92 (statement of Rep. Ted Deutch] ["I
agree with, I think, most of the witnesses that the balance struck by the DMCA to encourage cooperation and
to preserve protections for technology companies acting in good faith is the right one,"].

See, e.g., Bridy Statement at 16 ("As the internet has grown and thrived, so too have the copyright
industries, which have successfully adapted their business models to meet robust consumer demand for
music and films distributed online at reasonable prices in digital formats,”); Oyama Statement at 42 ("Online
services have created new markets and generate billions of dollars for the content industry, and this has only
been made possible because of the legal foundation that is provided by the DMCA"); Section 512 of Title 17 at
109 (statement of Rep. Zoe Lofgren, Member, Subcomm. on Courts, Intellectual Prop., &the Internet] ("I am
thinking back to when we crafted the DMCA, and clearly, without safe harbor notice and takedown, there
would not be an Internet. It wouldn't exist So I think It Is Important that we recognize that and, as with the
doctors, first do no harm,"].

Section 512 of Title 17 at 3 (statement of Rep. Jerrold Nadler, Ranking Member, Subcomm, on Courts,
Intellectual Prop., & the Internet].

Id. at 54 (statement of Maria Schneider, Grammy Award Winning Goniposer/Conductor/Producer,
Member of the Board of Governors, New York Chapter of the Recording Academy); .“lee also id. at 3 (statement
of Rep. Jerrold Nadler, Ranking Member, Subcomm. on Courts, Intellectual Prop., & the Internet) ("Maria
Schneider ... has been unable to stop online infringement of her works. The resulting loss of income,
combined with the cost of monitoring the Internet and sending takedown notices, threatens her ability to
continue creating her award-winning music.").

See, e.g., id. at 88 [statement of Sandra Aistars, Chief Executive Officer, Copyright Alliance) ("For the
hundreds of thousands of independent authors who lack the resources of corporate copyright owners, the
situation is even more dire. These entrepreneurs cannot dream of the robust enforcement programs that
larger companies can afford. Instead, they pursue issuing takedown notices themselves, taking time away
from their creative pursuits, or give up enforcement efforts entirely."); Oyama Statement at 47 ["In 2013 . . .
[Google] received takedown notices for approximately 230 million items."); Section 512 of Title 17 at 224
(responses to questions for the record by Annemarie Bridy) ("Enforcing copyrights online is a significant

Department of Commerce Internet Policy Task Force has encouraged the development of
additional voluntary practices to help streamline and improve the notice and takedown
system. While several witnesses before the Committee acknowledged the role that
voluntary initiatives may play in helping to address some of the costs and burdens of the
takedown process, others observed that these solutions can only go so far.™ it is time
to take stock of Section 512.

Mass Digitization

Related to the problem of orphan works, the Office is completing its analysis of copyright
issues inherent to mass digitization projects. In our study, witnesses have described some
of the difficulties presented by mass digitization projects under current copyright law, and
proposed specific statutory solutions.””

As hearing testimony indicated, the problem with respect to mass digitization is not so
much a lack of information as a lack of efficiency in the licensing marketplace.”! por a
digitization project involving hundreds, thousands, or millions of copyrighted works, the
costs of securing ex ante permissions from every rightsholder individually often will exceed
the value of the use to the user. Thus, even where a library or other repository agrees that
a use requires permission and would be willing to pay for a license (e.^r., to offer online
access to a particular collection of copyrighted works), the burdens of rights clearance may
effectively prevent it from doing so. To the extent that providing such access could serve
valuable informational or educational purposes, this outcome is difficult to reconcile with
the public interest.

challenge for copyright owners of all sizes, particularly small copyright owners. It is also a significant
challenge for OSPs of all sizes, particularly small OSPs.").

Department of Commerce DMCA Multistakeholder Forum, DMCA Notice-and-Takedowti Processes: List of
Good, Bad, and Situational Practices (Apr. 7,2015), ova//o/)/eathttp://www,ntia,doc.gov/files/ntia/
puhlications/dmca_good_had_and_situational_pracCices_documenLpdf.

See Section 512 of Title 17 at 261 (statement of the Association of American Publishers) ("AAP recognizes
that voluntary 'best practices’ and agreements among the key stakeholders in the online ecosystem are likely
to be the most practical, effective and achievable wa 5 rs to improve the daily operation of the notice-and-
takedown system ”),

See id. at 32 (statement of Paul F. Doda, Global Litigation Counsel, Elsevier, Inc.) ("Elsevier remains
concerned, however, that notwithstanding a government-mandated process to create voluntary measures,
some sites that need them the most will drag their feet").

11^ See Preservation and Reuse of Copyrighted Works at 25-26 (statement of Richard S. Rudick, Co-Chair,
Section 108 Study Group] ("Rudick Statement"]; id. at 55-57 (statement of Jan Constantine, General Counsel,
Authors Guild, Inc.) ("Constantine Statement").

m See Constantine Statement at 56 ("Collective licensing organizations such as ASCAP and BMI make sense
when there is a limited set of rights to be licensed and it is too costly to ask individuals whether a use is okay.
. . For mass digitization of books, one also needs a simple, one-stop shopping solution."),

While fair use may provide some support for limited mass digitization projects — up to a
point — the complexity of the issue and the variety of factual circumstances that may arise
compel a legislative solution. ^^2 the Office's view, the legitimate goals of mass

digitization cannot be accomplished or reconciled under existing law other than in
extremely narrow circumstances. For example, access to copyrighted works, something
many view as a fundamental benefit of such projects, will likely be extremely
circumscribed or wholly unavailable.^'’ For this reason, as part of its orphan works and
mass digitization report, the Office will recommend a voluntary "pilot program" in the form
of extended collective licensing ("ECL") that would enable full-text access to certain works
for research and education purposes under a specific framework set forth by the Copyright
Office, with further conditions to be developed through additional stakeholder dialogue
and discussion. Such input is critical, we believe, because ECL is a market-based system
intended to facilitate licensing negotiations between prospective users and collective
management organizations representing copyright owners. Thus, the success of such a
system depends on the voluntary participation of stakeholders.

Moral Rights

The issue of moral rights for authors was covered briefly in the recent hearings, but is an
essential consideration of copyright law. The Office believes that this issue is a critical

"2 See Rudick Statement at 30 [arguing that "a provision so dependent on analyses of individual facts and
circumstances is not well suited to major projects typical of Mass Digitization" and that "the doctrine of fair
use as codified in Section 107 does not begin to address many of the content owners' concerns, such as
security"].

113 See, e.g., Constantine Statement at 56 [collective licensing proposal for mass digitization "is about
providing access to , . . books at every college, university, community college, public school, and public library
in the country so those institutions could provide access to the vital communities they serve"]; i4wthors Guild
V. Google Inc., 770 F. Supp. 2d 666, 670 (S.D.N.Y. 2011] [benefits of Google Books program include the fact that
"[b]ooks will become more accessible" and that "Plihrahes, schools, researchers, and disadvantaged
populations will gain access to far more books").

See Authors Guild, Inc. v. Google Inc., 9S4 F. Supp. 2d 282, 291 (S.D.N.Y. 2013] [finding Google Books'
display of "snippets" to he transformative for purposes of fair use because "it is not a tool to he used to read
books"],

iis See Authors Guild, Inc. v. HathiTrust, 755 F.3d 87, 97 (2d Cir. 2014) (finding it "[i]mportant[]" for fair use
analysis that digital library did “not allow users to view any portion of the hooks they are searching," hut
"simply permit[ted] users to ‘word search' — that is, to locate where specific words or phrases appear in the
digitized books”),

The Subcommittee on Courts, Intellectual Property, and the Internet examined moral rights, along with
termination rights, resale royalty, and copyright term, during its July 15, 2014 hearing. In his opening
statement. Representative Howard Coble, former chairman of the Subcommittee, asked witnesses "to
examine whether the current approach to moral rights in the United States is sufficient" Moral Rights,
Termination Rights, Resale Royalty, and Copyright Term at 2-3 (statement of Rep. Howard Coble, Chairman,
Subcomm. on Courts, Intellectual Prop., &the Internet); see also id. at 3 [statement of Rep. John Conyers, Jr.,
Ranking Member, H. Comm, on the Judiciary) [discussing the "patchwork approach to moral rights in the
United States" and asking witnesses "whether they believe the [Dastar Corp. v. Twentieth Century Fox Film

topic for further analysis.n^ As I noted in the first copyright review hearing, in the past, the

rights of individual authors "have been lost in the conversation [T]hey should be the

focus/'ii*' Many members and witnesses throughout the hearings identified the issues of
individual authors, including attribution and the ability to say no to specific uses, as some
of the most important elements of a well-functioning copyright systemA^'* While the
United States is obligated to recognize the moral rights of authors under several existing
treaties, recent case law in the U.S. Supreme Court has led some academics to question the
strength of moral rights protection in the United States.'^”

in the Office's view, any comprehensive review of the functioning of the copyright system
must give serious and sustained attention to the individual rights of authors — apart from
corporate interests — and the need to ensure that those personal interests are adequately
protected. For this reason, the Office believes that further formal study of moral rights in
the United States is an appropriate next step in the congressional process.

V. ADDITIONAL POLICY ISSUES THAT WARRANT ATTENTION

This copyright review process has touched on almost every aspect of the Copyright Act and
has included an impressive expression of perspectives and priorities. The fact that we have
not addressed all of the issues here or positioned them for immediate legislative action
does not mean that they are unimportant or that Congress cannot in its discretion decide to
elevate them. Rather, these issues lack consensus as to the problem, require preliminary
research or consultation to identify issues, or reflect agreement that a legislative solution is
premature.

Indeed, certain issues are of paramount importance, but in our view should be left to the
courts to develop. Fair use falls squarely into this category. First articulated by the courts

Corp., 539 U.S. 23 [2003]] decision has weakened the United States' protection of moral rights, and if so, what
we might need to do to address this potential challenge.").

07 Moral rights generally refer to certain non-economic rights that are considered personal to an author,
typically including rights of attribution or paternity (the right to he credited as the author of one's work), and
the right of integrity [the right to prevent prejudicial distortions of one's work). See 3 MKLVILLH B. NIMMRR&
David Nimmer, Nimmer on Copyright § BD.OljA] (2015).

on The Register’s Call For Updates to U.S. Copyright Law: Hearing Before the Subcomm. on Courts, Intellectual
Prop., & the Internet of the H. Comm, on the judiciary, 113 th Cong. 62 [2013) (statement of Maria A. Pallante,
Register of Copyrights and Director of the t)..S. Copyright Office).

os See, e.g., Section 512 of Title 17 at 83 (statement of Rep. Judy Chu, Member, Subcomm. on Courts,

Intellectual Prop., & the Internet) ["[HJow do smaller and independent creators with limited resources expect
to have any impact]?]''); see also Ali (faiSstm, Authors Should Have Attrihution Rights Columbia's Ginsburg Says,
Bloomberg BNA: Patent, Trademark & Copyright Law Daily [Apr. 14, 2015), http://news.bna.com/ptdm/
PTDMWB/split_display.adp?fedfid=66988793&vname=ptdbulallissues&jd=a0g5c2y6v7&split=0.

on See Jane C. Ginshurg, Moral Rights in the US.: Still in Need of a Guardian Ad Litem, 30 CARDOZO ARTS & ENT L.].
73 (2012) [noting that the Supreme Court's decision in Dastar Corp. v. Twentieth Century Fox Film Corp., 539
U.S. 23 (2003) "has probably left authors worse off').

in the nineteenth centuiy/^^i subsequently codified by Congress in 1976, fair use is a
critical safeguard of the Copyright Act .122 xhe United States has a rich and comprehensive
body of jurisprudence in this area, which our courts continue to develop to respond to ever
new fact patterns. Fair use is not a panacea or replacement for a properly balanced statute,
but witnesses agree, as does the Copyright Office, that further codification of the doctrine is
ill-advised at this time. ^^3 That said, fair use should be as accessible as possible to both
good faith users and copyright owners and the government can play a role by providing
resources or guidance. As noted above, the Copyright Office has recently completed a
public database of fair use holdings with this in mind.

Similarly, the Copyright Office will release shortly a major report on the exclusive right of
"making available." This right, which is reflected in two treaties and multiple free

Folsom V. Marsh, 9 F. Cas. 3A2 fC.C.D. Mass. 1841) [No. 4901); see also Lloyd L. Weinreb, Fair Use, 67
FORDHAM L. REV, 1291 [1999) [revised version of the 1998 Donald C. Brace Memorial Lecture) ["our
understanding of fair use has not progressed much beyond Justice Story’s observation in Folsom v. Marsh, the
case usually cited as the source of the doctrine in this country. . .." (footnote omitted)).

122 Act of Oct. 19, 1976, Pub. L. No. 94-553, § 107, 90 Stat. 2541, 2546 [1976) [codified at 17 U.S.C, § 107); S.
Rep. No. 94-473, at 61 (1975) ("The judicial doctrine of fair use. . . would be given express statutory
recognition for the first time in section 107").

123 See, e.g., The Scope of Fair Use: Hearing Before the Suhcomm. on Courts, InteUectuai Prop., & the Internet of
theH. Comm, on the Judiciary, 113th Cong. 32 (2014) (statement of David Lowery, Singer/Songwriter and
Lecturer, Terry College of Business, University of Georgia) ("As a professional singer-songwriter, I believe
that fair use doctrine, as intended by Congress, is working in the music business and music industry and
should not be expanded,"); id. at 8 [prepared statement of Peter Jaszi, Professor, Faculty Director, Glushko-
Samuelson Intellectual Property Clinic, Washington College of Law, American University) ("IVe come to the
conclusion that fair use is definitely alive and well in U.S. copyright law, and that, after a rocky start, the
courts are doing an excellent joh implementing the congressional direction contained in Sec, 107, Fair use
doesn't need legislative 'reform,’ but , . . it might benefit from certain kinds of legislative support in years to
come— especially relief from the operation of other statutory provisions [such as the current law of statutory
damages) that have the unintended consequence of discouraging its legitimate exercise."); id. at 22 (prepared
statement of June M. Besek, Executive Director, Kernochan Center for Law, Media and the Arts and Lecturer-
in-Law, Columbia Law School) ("Despite the concerns just voiced, fair use remains a rule whose application is

best made by judges, as Congress recognized in codifying the doctrine in section 107 Without altering the

text of section 107, Congress might separately address the problems of mass digitization, including whether
authors should be compensated for publicly beneficial uses . . . .’’); id. at 40 (statement of Kurt Wimmer,
General Counsel, Newspaper Association of America) ["[Tjhis is an issue that we think can be remedied by the
courts rather than Congress. We believe the currentstateof the Copyright Act, including the formulation of
fair use, strikes the right balance and should not be changed."); id. at 24 (statement of Naomi Novik, Author
and Co-Founder, Organization for Transformative Works) ['Tn general, I strongly urge Congress to resist any
suggestion of narrowing fair use, including by trying to replace it with licensing,").

’2^5ee Study on the Right of Making Available; Comments and Public Roundtable, 79 Fed. Reg, 10,571 (Feb,

25, 2014), Specifically, Representative Watt requested that the Office address: (1) how the existing bundle of
exclusive rights under Title 17 covers the making available and communication to thepuhlic rights in the on-
demand digital environment (such as peer-to-peer networks, streaming services, and music downloads); (2)
how foreign laws have interpreted and implemented relevant provisions of the World Intellectual Property
Organization (WlPO) Internet Treaties, to which the United States is a party; and (3) whether (and if so, how)
Congress should amend Title 17 to strengthen or clarify U.S. law in this area. Id. at 10,572,

trade agreements, ^26 requires the United States to provide authors of works, producers of
sound recordings, and performers whose performances are fixed in sound recordings with
the exclusive right to authorize the transmission of their works and sound recordings. In
the specific context of on-demand transmissions, the treaties provide members with
flexibility in the manner in which they implement this right.

Despite unanimous agreement across the U.S. government as to the scope and breadth of
this right, 128 some courts in the United States have struggled to apply the right
appropriately in the digital age.i 29 Although participants in the Office's study, as well as
witnesses at the hearing on this topic, generally agreed that the complexity of the issue has
led to some contradictory court decisions, most rejected any need for specific legislative

125 wiPO Copyright Treaty art. 8, Dec, 20, 1996, 36 1.L.M. 65; WIPO Performances and Phonograms Treaty
arts. 10 & 14, Dec. 20, 1996, 36 I.L.M. 76.

126 See, e.g., U.S.-Austl. FTA arts. 17.4.1, 17.5 (May 18, 2004); U.S.-Bahr. FTA arts. 14.4.2, 14.5 [Sep. 14, 2004);
U.S.-Chile FTA arts, 17.5.2, 17.5.3 [June 6,2003); IJ.S.-Colom. TPA arts. 16.5.3, 16.5.4 [Nov. 22, 2006); IJ.S.-
Dom. Rep. -Cent. Am. FTA [CAFTA-DR] arts. 15.5.2, 15.6 (Aug. 5,2004); U.S.-Jordan FTA arts. 4[l)(c)-[d) (Oct.,
24,2000) (incorporating provisions of the WCT and WPPT); U.S.-Kor. FTA arts, 18.4,2, 18,5 (Feh, 10, 2011);
U.S.-Morocco FTA arts, 15.5,3, 15.6 (June 15, 2004); U.S.-Oman FTA arts. 15.4.2, 15,5 (Nov. 15, 2004); U.S.-Pan.
TPA arts. 15.5,2, 15.6 (June 28, 2007); U.S.-Peru TPA arts. 16.5.3, 16.5.4 (Apr. 12, 2006); U.S.-Sing. FTA arts.

16, 4.2(a), 16.4.3 [May 6, 2003), all available at http://www.ustr.gov/trade-agreements/free-trade-
agreements.

'27 This flexible approach is known as the "umbrella solution." See Mihaly Ficsor, WIPO, Guide to the
Copyright and Related Rights Treaties Administered by WIPO and Glossary of Copyright and Related Rights
Terms 209-10, 247-48 (2003), available at htCp://www.wjpo.int/edocs/puhdocs/en/copyright/891/wipo_
puh_891.pdf.

12 a 5ee, e.g., Internet Policy Task Force, U.S. Drp't of Commerce, Copyright Policy, Creativity, and Innovation in
THE Digital Economy 15-16 (201.3), available at htcp://www.usp to.gov/sites/default/files/news/
puhlications/copyrightgreenpaper.pdf (stating that the distribution right provided in the IJ.S. Copyright Act
was intended to include "the mere offering of copies to the public," which is considered to be part of making
available); Piracy of Intellectual Properly on Peer-to-Peer Networks: Hearing Before the Subcomm. on Courts,
the Internet, & Intellectual Prop, of the H. Comm, on the Judiciary, 107th Cong. 114 (2002) (Letter from
Marybeth Peters, Register of Copyrights, U.S. Copyright Office, to Rep. Howard Berman) ("While Section 106
of the U.S. Copyright Act does not specifically include anything called a 'making available' right, the activities
involved in making a work available are covered under the exclusive rights of reproduction, distribution,

public display and/or public performance ”); H.R. REP. No. 105-551, pt 1, at 9 (1998) (concluding that the

WIPO Internet Treaties "do not require any change in the substance of copyright rights or exceptions in U.S.
law.").

125 Compare Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 199, 203 [4th Cir. 1997) ("When a
public library adds a work to its collection, lisLs the work in its index or catalog system, and makes the work
available to the borrowing orbrowsing public, it has completed all the steps necessary for distribution to the
public.”), and A&M Records, Inc. v. Napster, Inc., 239F.3d 1004, 1014 (9th Cir. 2001) ("Napster users who
upload file names to the search index for others to copy violate plaintiffs' distribution rights."), with London-
Sire Records, Inc. v. Doe 1, 542 F. Supp. 2d 153, 168 (D. Mass. 2008) ("Merely because the defendant has
‘completed all the steps necessary for distribution' does not necessarily mean that a distribution has
occurred." (citation omitted)), and Capitol Records, Inc. v. Thomas, 579 F. Supp. 2d 1210, 1227 (D. Minn. 2008)
(holding that § 106(3) of the Copyright Act does not encompass mere offers to distribute).

i^i" See, e.g., Jane C. Ginsburg, Morton L. Janklow Professor of Literary and Artistic Property Law, Columbia
Law School, Comments Submitted in Response to U.S. Copyright Office's Feb. 25, 2014 Notice of Inquiry at 3-

action.^3^ The Copyright Office trusts that our report will in and of itself provide useful
guidance to the courts on the manner in which the making available right should be
interpreted and recognized in the United States. However, we remain available to Congress
should it wish to further consider the question.

Moving to topics of copyright administration, the Copyright Office has led active public
discussions about the future evolution of both copyright registration^^^ copyright

recordation. In today's world, copyright owners want to register on mobile devices and
assert their authorship and licensing information based upon data that is readily accessible
to other actors around the globe. And companies who aggregate, disseminate, or otherwise
use copyright data want the Copyright Office to supply timely and accurate information and
facilitate interoperable applications. This is an appropriately exciting vision for the
twenty-first century; as witnesses explained, robust information technology structures will
support any number of new copyright transactions. Thus, these sorts of paradigm shifts
are necessarily tied to decisions regarding Copyright Office improvements generally.

The mandatory deposit provisions, which require publishers to submit copies of works in
support of the national collection of the Library of Congress, are also out of date and
require attention. Issues include the operation and relationship of mandatory deposit

5, available cfthttp://copyrightgov/docs/making_available/comments/docket2014_2/Jane_Ginsburg.pdf;

The Scope ofCopyright Protection: Hearing Before the Subcomm. on Courts, Intellectual Prop., & the Internet of
the H. Comm, on the Judiciary 10 [2014) [statement of David NImmer, Professor from Practice, UCLA School of
Law & Of Counsel, Irell & Manella, LLP); The Scope of Copyright Protection at 41 &n.l5 [statement of Glynn S,
Lunney, jr., McGlinchey Stafford Professor of Law, Tulane University Law School).

See, e,^,, Transcript, U.S, Copyright Office, Public Roundtable on the Right of Making Available 231:10-14
[May 5, 2014), available othttp://copyright.gov/docs/making_available/public-roundtable/transcript,pdf
[statement of Jonathan Band, Counsel, Library Copyright Alliance) (“[MJaybe there is some ambiguity, but we
are probably better off letting the courts deal with the cases as they arise, as opposed to trying to deal with it
legislatively. , , ,”); id. at 235:13-15 [statement of Keith Kupferschmid, General Counsel & Senior Vice
President for Intellectual Property, Software & Information Industry Association) [''[WJe do not think that
any type of further clarification or amendment to the statute is necessary."). But see, e.g., Peter S. Menell,
Koret Professor of Law, University of California, Berkeley School of Law, Comments Submitted in Response to
U.S. Copyright Office's Feb. 25, 2014 Notice of Inquiry at 2, avof/oWe at http://copyright.gov/docs/making_
available/comments/docket2014_2/Peter_Menell.pdf ["Congress should clarify the scope of the distribution
right. The dissensus surrounding the 'making available' issue needlessly creates uncertainty and increases
the costs of litigation,").

i32.Seel7U.S.C. §408.

See 17 U.S.C. §§ 203, 205, 304.

’ See U.S. Copyright Office: Its Functions and Resources at 97 (statement of Robert Brauneis, Professor,

George Washington University Law School & Abraham L. Kaminstein Scholar-in-Residence, U.S. Copyright
Office] [noting that the Copyright Office "would see a large number of new copyright transactions,
particularly smaller transactions’’); Letter from Maria A. Pallante, Register of Copyrights and Director, U.S.
Copyright Office, to John Conyers, Jr., Ranking Member, H. Comm, on the Judiciary 6 [Mar. 23, 2015), available
ot http://copyright.gov/laws/testimonies/022615-testimony-pallante.pdf [summarizing witness statements
regarding the benefits of a well-functioning Copyright Office).

requirements to copyright registration requirements, the viability of "best edition"
requirements in the digital age,’’’*> security of electronic works, and consideration of the
Library's stated goalsd^^ We will need to meet with the Library and stakeholders
regarding both the statute and applicable regulations before advising Congress further.

There are multiple other issues that will take time. For example, witnesses have offered
opinions about statutory damages, the first sale doctrine, compulsory video licenses, term
of protection, termination rights, and the copyrightability of public standards and codes.
We have not prioritized these for either immediate legislative action or immediate study at
this time. However, we agree that they are important issues and if the Committee desires
further analysis, we are of course available to assist.

Finally, we have identified a list of corrections that we recommend the Committee adopt to
address some technical concerns in the statute. That list is attached as a rider to my
statement.

VI. Conclusion

As the Committee continues to assess not only themes and conclusions of the past twenty
hearings, but the experiences of the past four decades, the Copyright Office is here to assist
you. Thank you for your leadership on copyright policy.

i^'SeeiyU.S.C. §§ 407, 408.

136 The "best edition" of a work is defined in the Copyright Act as "the edition, published in the United States
at any time before the date of deposit, that the Library of Congress determines to be most suitable for its
purposes." 17 U.S.C. § 101.

See generally Letter from lames H. Billington, Librarian of Congress, to Rep. Robert W. Goodlatte,
Chairman, H. Comm, on the Judiciary 5 (Apr. 23, 2015] [in part discussing mandatory deposit provisions in
relation to the national collection!.

ATTACHMENT

Proposed Technical Amendments

• § 109(e)

This provision is an exception to the rights of public performance and public
display for electronic audiovisual games intended for use in coin-operated
equipment. It was added by the Computer Software Rental Amendments Act of
1990, which stated that the exception "shall not apply to public performances or
displays that occur on or after October 1, 1995.”i Although set forth in the Act as
passed by Congress, the termination of the exception was not codified in section
109(e}. Because this exception no longer applies, it should be repealed to avoid
confusion.

. § 408(c)(3)

This provision allows a claimant to obtain a single renewal registration for
certain groups of works by the same individual author that were in their first
copyright term on January 1, 1978, provided that the claim is submitted within
the lastyear of that term.^ This provision can no longer be applied because the
first term for all such works expired on or before December 31, 2005, It thus
should be repealed.

• §508

Section 508 requires United States court clerks to notify the Register of
Copyrights when any action under Title 17 is filed. ^ When any final order or
judgment is issued in such a case, the clerks must similarly notify the Register, as
well as send a copy of the order or judgment, along with any written opinion.

' Pub. L. No. 101-650, § 804(c), 104 Stat, 5089, 5135, amended by Uruguay Round Agreements Act,
Pub. L. No. 103-465, § 511, 108 Stat. 4809, 4974 (1994).

'^See 17 U.S.C. §408(c)(3)(C) (providing that "the renewal application and fee are received not more
than twenty-eight or less than twenty-seven years after the thirty- first day of December of the
calendar year in which all of the works were first published").

^ Section 508 provides in full:

Notification of filing and determination of actions

(a) Within one month after the filing of any action under this title, the clerks of the courts of
the United States shall send written notification to the Register of Copyrights setting forth, as
far as is shown by the papers filed in the court, the names and addresses of the parties and
the title, author, and registration number of each work involved in the action. If any other
copyrighted work is later included in the action by amendment, answer, or other pleading,
the clerk shall also send a notification concerning it to the Register within one month after
the pleading is tiled.

(b) Within one month after any final order or judgment is issued in the case, the clerk of the
court shall notify the Register of it, sending with the notification a copy of the order or
judgment together with the written opinion, if any, of the court

(c) Upon receiving the notifications specified in this section, the Register shall make them a
part of the public records of the Copyright Office.

17 U.S.C. 5 508.

Section 508 also requires the Register to make these filings part of the public
record of the Copyright Office. This section should be eliminated because the
paper-based Section 508 filing system has become obsolete in an era of
electronic court information resources such as PACER, Lexis, and Westlaw.

There is no efficient way to search the voluminous paper Section 508 filings and,
perhaps not surprisingly, in recent years there has been virtually no demand to
access them. In sum, the administrative costs to the courts of preparing and
sending these notices, and the costs to the Office of receiving and maintaining
these records, far outweigh any usefulness to the public.

• § 708(a], final paragraph, first sentence

This section sets forth the procedure for fixing various fees allowed to be
charged by the Copyright Office. The sentence in question follows a list of
specific fees that are proposed by the Register and submitted to Congress
(Section 708(a)(l)-(9)) and the establishment of fees for the filing of cable and
satellite statements of account (Section 708(a)(10)-(ll)).* The sentence reads:
"The Register is authorized to fix fees for other services, including the cost of
preparing copies of Copyright Office records, whether or not such copies are
certified, based on the cost of providing the service. The Office proposes a
technical change whereby the last phrase of the sentence would be amended to
read "based on the costs of providing the services." The pluralization of "costs"
and "services" would permit the Office greater flexibility in fixing its fees because
it could consider the total costs of all of its "other" services in establishing its fee
schedule for those services, thus permitting the Office to consider the public
need for, and individual benefits of, particular services. This is the procedure for
the fee schedule submitted to Congress for the fees enumerated in Section
708(a)(l)-(9).® The proposed technical change would thus eliminate a statutory
discrepancy in the treatment of different categories of fees for fee-setting
purposes.

. §801(b](2](D)

The reference to "section 111(d)(1)(C) and (D)" in section 801(b)(2)(D) should
instead be a reference to "section 111(d)(1)(E) and (F)" to reflect changes made
by the Satellite Television Extension and Localism Act of 2010.^

i5eel7U.S.C. §708(a].

s/d.

^ See 17 U.S.C. §§ 708[b)[2) ["the Register may, on the basis of the study under paragraph [1], and
subject to paragraph [5], adjust fees to not more than that necessary to cover the reasonable costs
incurred by the Copyright Office for the services described in paragraph [1], plus a reasonable
inflation adjustment to account for any estimated increase in costs"); 708[b)[5),

^ Pub. L. No. 111-175, § 104, 124 Stat. 1218, 1233 (setting forth gross receipts limitations in Section
lll(d](l)(E] and (F)).

• § 802 (i)

Title 17 should be amended to reflect the Librarian of Congress's authority to
remove Copyright Royalty Judges under the determination of the United States
Court of Appeals for the District of Columbia in the 2012 case Intercollegiate
Broadcasting System, Inc. v. Copyright Royalty Board that "without the
unrestricted ability to remove the Copyright Royalty Judges, Congress’s vesting
of their appointment in the Librarian rather than in the President violates the
Appointments Clause.’'^ In its opinion, the court of appeals expressly stated that
it was "invalidatjing] and severing] the portion of [section 802] limiting the
Librarian's ability to remove the Judges."^ The Office is available to assist
Congress with an appropriate conforming amendment.

• Miscellaneous typographical errors

o Section 111(a): Paragraphs (a)(1) and (2) each have "or" after the
semicolon at the end but (3) and (4) do not; the use of "or" in these
paragraphs should be corrected.

o Section 111(e): In paragraph (e)(1), delete the superfluous "the" in the
first line before "subsection (f)(2).’’

o Section 119(d)(10)(A): Delete "of at the end of subparagraph (d)(10)(A)
introducing clauses (i) and (ii).

8 684 F.3d 1332, 1342 (D.C. Cir. 2012).
’ W.

Mr. Marino. Thank you, Ms. Pallante.

We will now proceed under the 5-minute rule with questions for
the witness. And I will he begin by recognizing myself for 5 min-
utes.

And, Ms. Pallante, I think you know where I’m coming from
when I say this: If we could just take exactly what you said and
not have a hearing and do it, we would be fine. But we have to
have a hearing.

Ms. Pallante. I’m all for that.

Mr. Marino. And we will proceed that way.

I first want to thank you for your diligent work in advising this
Committee in our extensive oversight. Your insight is an invaluable
process that helps us get through this. Your frameworking of the
system the way it is and where it should be is very remarkable.
And I’ve never heard such a precise, accurate, complete report to
Congress done in less than 10 minutes. So I thank you for that.

As we move forward, wrapping up through this review, it is clear
that several changes must be made to bring the Copyright Office
and copyright law into the 21st century. And I know no one is
going to do it better than you. We have to modernize the Copyright
Office, being chiefly — that’s the number one thing among what has
to be done.

But, first, I would like to request that I be able to enter a state-
ment from the U.S. Chamber of Commerce that outlines their
views on copyright reform, which includes their echo of support for
restructuring the Copyright Office. Do I hear any objection? Hear-
ing none, then so ordered.

[The information referred to follows:]

The Register’s Perspective on Copvri 2 ht Review
U.S. House of Representatives
Judiciary Committee
April 29. 2015

Statement of the U.S. Chamber of Commerce for the Record

Chairman Goodlatte, Ranking Member Conyers, and Members of the Committee, the
U.S. Chamber of Commerce appreciates your leadership and thoughtful consideration
through the copyright review process. The Chamber supports your efforts and desires to
maintain the copyright system as an engine of economic growth and creativity. In
particular, we support the growing momentum for restructuring of the Copyright Office
to better serve consumers and the businesses that produce valuable copyrighted works
and help deliver those works to the public.

The U.S. Chamber of Commerce is the world’s largest business organization representing
the interests of more than 3 million businesses of all sizes, sectors, and regions. Our
members range from mom-and-pop shops and local chambers to leading industiy
associations and large corporations.

The Global Intellectual Property Center (GIPC) w'as established in 2007 as an affiliate of
the U.S. Chamber of Commerce. Today, the GIPC is leading a worldwide effort to
champion intellectual property rights and safeguard U.S. leadership in cutting-edge
technologies as vital to creating jobs, saving lives, advancing global economic growth,
and generating breakthrough solutions to global challenges.

I. Introduction

The Committee’s copyright review process began with the common-sense notion that any
responsible government must work to ensure its laws remain up to date. This was
expressed clearly by Chainnan Goodlatte in one of the earliest hearings in this process
when he said in his opening statement, “we must undertake this review to ensure that
copyright law continues to incentivize creativity and innovation in the digital age.”' As
the U.S. Commerce Department found, IP-intensive industries overall account for 40
million jobs, over a third of U.S. gross domestic product (GDP), and over 60% of U.S.
exports.* Similarly, total copyright industries add almost $2 trillion to U.S. GDP, pay
34% higher wages over average U.S. wages, and employ over 1 1 million people.'

1 “A Case Stjdffor Consensus Building: The Coprgrigjot Trindpks Project,” Hearing before the Subcommittee
on Courts, Intellectual Property, aitd the Internet of the Committee on the Judiciary, House of
Representatives, 113* Cong., D Sess., May 16, 2013 at 8 (Statement of The Honorable Bob
Goodlatte) .

- “Intellectual Property and the US. Economy: Industries in rocus,” Economics and Statistics Administration
and the U.S. Patent and Trademark Office (March 201 2) (available at

htt p:/ A cvvtv.usoto. gov .'sites /default. 'files /news .''publications /IP Report March 2012.pdf.)

“Copyright Industries in the U.S. Eocmmy,” Stephen R. Siwek (2014) (available at
ht tp: / ,/v.ww.iipa.com /odf/2Ql lCpYftRptFuil.PDF .)i

However, opponents of effective copyright must not ignore the reality that our copyright
system has worked tremendously well and should not use this Committee’s hearings as a
platform to suggest far more than updates to the law, but wholesale policy changes to our
copyright system/*

11. The Committee Should Reject Calls to Weaken Copyright

Throughout the copyright review process, there have been proposals that cannot be fairly
characterized as updating or clarifying the law, or improving efficiency, but rather would
constitute wholesale policy changes. These are well beyond the purpose of this review
and would weaken the effectiveness and benefits of our copyright system.

Digital First Sale

To be clear, the First Sale doctrine already applies to copies in digital fomiats, including
CDs, DVDs, etc. The proposals to transform the First Sale Doctrine into a permission for
a “forward and delete” approach would depart from history by expanding the First Sale
Doctrine to limit reproduction rights, would be dependent on the reliability of the
obligation of the sender to delete, and even if that obligation were perfectly enforceable,
would still harm the markets for works to a much greater degree than ever before. The
Copyright Office’s study of this issue reached the same conclusions in 2001 and they
remain equally applicable in 2015, as the fundamental calculus has not changed.*’

An even further departure from the historic role of the First Sale doctrine is the proposal
to amend the Copyright Act to pre-empt contract terms that some commenters dislike in
the name of allowing the resale of consumer products. However, there is no evidence to
support the supposition that in fact the marketplace for such resale is inhibited. Rather,
the reality of this proposal is that it is a drastic solution to a nonexistent problem.

R Statutory Damages

Some have called for reducing the availability of statutory damages notwithstanding the
fact that they are lower today than they were at the time of the 1 909 Copyright Act and
the 1976 Copyright Act, adjusted for inflation.*’ Statutory damages are a cornerstone of
the U.S. copyright system that have been included in the Federal Copyright Act without
interruption since its first enactment in 1790. In the midst of an age of unprecedented
levels of piracy is exactly the wrong time to turn away from this time-honored aspect of
our copyright law.

•* ''2013 in Kiivmv: 'I 'ht NtxL Creal Co^’righc yld?” Cotyniie McSheciry, Hlectronic Jrrontier Jr'ouiidation,
Dec. 26, 2013 (describing die U.S. Copyright Act as ‘l^rokeii” and lacldiig “sanity' ; (available at
hi rps://\vw\v.eff.org./dccpliiiks/2013/12/iiexl-grea( -copyright -actb
"DMCA Section 104 Repoft” U.S. Copyriglit Office (zUugust, 2001) (available at
htrp: /./copyright-fflv/' reports /stud ies/dmca/'sec-l 04-report-vol-l.pdf .)

"CoSpright Remedies,'' Hearing before tlie Subcommittee on Courts, Intellectual Property, and tlie
Internet of the Committee on the Judiciaty, House of Pepresenratives, 1 13'’'' Cong., 2*''^ Sess., luly 24,
2014 at 29 (Statement of Steven Tepp).

C Anti -Circumvention

The basic protection against the hacking of copyrighted works has long been understood
to be a fundamental aspect of promoting licensed, lawful access to works online. Indeed,
there has been an explosion of authorized services since the enactment of anti-
circumvention provisions in the DMCA in 1998. Further, the evidence submitted to the
Copyright Office throughout the five previous (and current ongoing) section 1201
rulemakings demonstrate only narrow incidences in which legitimate uses were inhibited,
and those have been addressed. Notwithstanding this lack of evidence, some continue to
make broad claims of a parade of horribles and seek to undermine the protection of
section 1201 of the DMCA. The Committee should reference the facts more than the
rhetoric and dismiss such proposals.

D Term of Copyriaht

In 1998, the United States decided to match the term of copyright protection afforded by
the European Union so that American creators and copyright owners would not be at a
competitive disadvantage. Since then, the life plus 70 term has become a common
standard around the world. The U.S. Supreme Court has affirmed the consistency of the
life plus 70 term with the First Amendment and the Copyright Clause.^ This is an
appropriate standard that was adopted after due deliberation and debate. The continued
objections from those who lost that debate have not become more persuasive and
certainly have nothing to do with updating the Copyright Act.

111. Restructuring the Copyright Office

The Chamber is encouraged by the emergence of restructuring the Copyright Office
as the keystone of the copyright review process. The current limitations on the utility
of the registration and recordation databases underserve the public, as the Copyright
Office itself has acknowledged.*

The placement of the Copyright Office within the Library of Congress is essentially
an accident of history, driven by the desire of the Library in the 19'*’ Century to be
able to take copies of works submitted for copyright registration and add them to the
Library’s collection at no cost to the Library. However, this arrangement has evolved
to produce real operational limitations on the Copyright Office that inhibit it from
serving the public to its best ability.

Congress created a position of Register of Copyrights to lead the Copyright Office,
and administer the copyright system, provide technical assistance to U.S. citizens and
foreign officials, engage in international copyright matters, and offer policy counsel
to Congress. But the Register does not have the authority to do the job he or she is

" FJdmdv. Ashcroft, 537 U.S. 186 (2003).

® '‘Report and Recommendations of the Technical Upgrades Special Rroject Teamf Office of the Chief

Tcchnologj' Office, U.S. Copyright Office (Feb. 201 5) (available at

h ttp: / /copYi:igiit.cov/docs /technical upgrades /usco-technicalupgrades.p df.'i

hired to do. All Copyright Office internal operations such as IT and HR are
dependent on the approval of the Library of Congress, and the Register cannot issue
rule makings or regulations, the Librarian of Congress does.

As a practical matter, the Copyright Office is a secondary consideration for the
Librarian, whose primary mission is to run the national Library. Administering the
multi-trillion dollar copyright system should not be a part-time job. Of course, in
reality, the Register is the source of copyright expertise, not the Librarian. In
copyright litigation, courts cite to the views of the “Copyright Office” or the
“Register,” not to the Librarian. The Librarian is not an IP official, but nonetheless
has authority over the Copyright Office.

As a practical matter, this poses real operational problems for the Copyright Office.
The Librarian has sought authority to divert appropriations from the Copyright Office
to other Library offices. The Copyright Office has no IT department in the real sense;
is it forced to rely on the Library’s willingness (or not) to support it. As a result.
Copyright Office services remain woefully outdated, some still paper-only.'’ In short,
central processes essential to the administration of the copyright system are beyond
the Register’s control. Further, the Library salary structure lags behind Executive
Branch agencies, making it harder for the Copyright Office to attract and retain top
talent.

The Register of Copyrights, the true head of the Copyright Office and a position
grounded in copyright expertise, should be appointed by the President and confirmed
by the Senate. Legislative language can be included to ensure that the Library can
continue to receive copies of works in a reasonable way. It can also be clear that the
Copyright Office retains the ability to give candid, expert advice and counsel to
Congress, and that it remains subject to full Congressional oversight.
Correspondingly, restructuring the Copyright Office need not disturb or alter the
present allocation of EP responsibilities within the relevant Executive Branch
agencies.

Restructuring the Copyright Office will not only allow it to modernize, it may help
resolve some of the substantive copyright issues before the Committee. For example,
more vibrant, functional databases of authorship and rights holders can help alleviate
the orphan works issue and generally reduce transaction and information costs across
the copyright system. Further, to the extent that Congress will rely on the Copyright
Office to implement and administer the Copyright Act, the first step must surely be to
provide a structure that allows the Copyright Office the best position to perform its
functions.

IV. Conclusion

'‘Tramformirig Documsnt Rscot'datwn at the Umted States Co^right Office” A Report of the Abraliam L.
Kaminstcin Scholar in Residence, U.S. Copyright Office (Dec. 2014)(available at
http : .' .'cop yrigh t .g ov.f d oc s .'recordation /recordation-repoi't.pdf .)'

The nearly two-dozen hearings the Committee has conducted over the past two years on
copyright review have represented an historic commitment to maintaining the vibrancy of
our copyright system. The Chamber appreciates and commends this undertaking. As the
Committee now considers the lessons of those hearings, we submit that the single most
important and long-lasting result of this process, and the one upon which any other steps
should be built, is to restructure the Copyright Office. The Chamber stands ready and
eager to assist in that effort.

Mr. Marino. Ms. Pallante, the idea for an efficient, searchable
database seems to have a lot of support. Can you tell us what you
believe you and your team would need in terms of resources, per-
sonnel, et cetera, in order to create and maintain such a database
that will get us into the second half of the 21st century?

Ms. Pallante. Thank you, Mr. Marino. So I agree that the Copy-
right Office database is a key piece of the digital economy, and we
have actually several databases that are not connected. So one
thing we have to do is make sure that the registration database —
that is, when people apply for registration and receive certificates —
is connected to the recordation database, that reflects later trans-
actions in the marketplace, including licensing of those works. And
then that database, that chain of commerce needs to reflect
metadata and connect to private sector databases where people can
be found and licenses can happen.

So, in terms of resources, I would say two things: We should look
at the fee schedule that we currently have, and we should figure
out what, if anything, the Committee would like us to do in terms
of charging for capital expenses. Right now, our statute allows us
to charge for cost only, not future cost. That’s something that has
come up in our appropriations hearings. It’s an interesting ques-
tion. Obviously, it would have to be carefully calibrated to be rea-
sonable. Beyond that, some degree of taxpayer support I think is
important because I don’t think you should put the database and
the cost of the databases on the backs of copyright owners alone.
So many user communities and aggregators also use — the general
public uses the databases. So, that said, I think that the lion’s
share of it can be through fees.

Otherwise, I think in terms of technology, we have to have the
ability to focus our own staff on our technological needs and not
have what we need diluted through, perhaps, what the Library, as
a bigger agency, needs. That’s been a big problem for us.

Mr. Marino. My next question, on the issue of depositing their
works for purposes of registration. I’m told there are limited in-
stances in which a party can simply apply and produce a copy in
digital form. Is this true?

Ms. Pallante. Yes. So it’s a vestige of the relationship of the
Copyright Office to the Library. And, in analog days, when one reg-
istered and provided a physical copy, the Library became the ar-
chive for that copy. Today, we don’t need preservation-quality
works to register them. We need a data-driven system where peo-
ple can register on iPads and other mobile devices. So that is true.

Mr. Marino. And, in 50 seconds, my last question, can you de-
scribe the system used for parties to register in order to receive the
safe harbor under DMCA?

Ms. Pallante. Are you talking about our database?

Mr. Marino. Yes.

Ms. Pallante. So that has been pending for some time. We have
a rudimentary version of it that has been in place since 1998, when
the DMCA was enacted. Three years ago, we did a rulemaking and
provided guidance as to how to update that so it’s more interactive
and interoperable. And, because our IT is managed by the Library
of Congress, it is one of many projects still pending in that office.

Mr. Marino. Thank you. And we’ve come in under the wire by
15 seconds.

The Chair now recognizes the gentleman from Michigan, the
Ranking Member, Congressman Conyers.

Mr. Conyers. Thank you. Chairman Marino.

And I want to congratulate you, Ms. Pallante, you took 35 pages
and boiled them down to 10 minutes in a very excellent way.

In your written statement and oral statement, you suggest that
there are policy issues that warrant studies and analysis, including
section 512, section 1201, mass digitization, and moral rights. I
would like the Copyright Office to conduct and complete reports on
those policy issues, and we’ll work with the Chairman on making
a formal request. Is that compatible with all of our discussions and
all your writing?

Ms. Pallante. Thank you.

Mr. Conyers. Okay. A strong copyright system requires a strong
Copyright Office, obviously. And there’s consensus to restructure
the Copyright Office to bring it into the 21st century and to
strengthen the copyright system. We think it hasn’t been given the
appropriate attention considering its importance. You already pro-
vided a response to my February request for your views on restruc-
turing the Office. And I’ve got a couple followup questions.

In your letter, you urge Congress to decide soon on the organiza-
tional structure of the Office. What kind of a realistic timeline for
Congress addressing the restructuring do you have and why?

Ms. Pallante. That’s an excellent question, Mr. Conyers. I
think, ideally, you would do it in this Congress. And my reason for
saying that is because

Mr. Conyers. As soon as possible.

Ms. Pallante [continuing]. Because we have a situation where
we need to map out the next decade really. And we either have to
do that in the current structure, where, for example, we’re making
IT investments for the copyright system through the Library’s cen-
tral IT governance process, or we’re doing it in a way that’s more
targeted to the copyright system. That’s not theoretical. We actu-
ally have a recordation system that is paper-based. We’ve done all
of the analysis for that. We’re ready to bring it online, and we need
to know whether we’re doing that in our own IT infrastructure and
subject to our own IT needs or through a general agency model. I
also think that some of the policy issues that are interesting to this
Committee — small claims, orphan works — would be greatly im-
proved if you could structure the agency itself properly.

Mr. Conyers. Very good. I’m going to combine my last two ques-
tions because I know the light is going to flash. The Copyright Of-
fice provides an impartial voice for copyright policy in Congress
and the Administration. How would it continue to do so under the
different approaches you’ve suggested as an independent branch?
And, finally, how would the different approaches you suggested in
your letter affect your Office’s future funding? And would this im-
pact fees for the copyright community?

Ms. Pallante. So it’s a big question, obviously. We’ve been in
the same structure for — two big questions — we’ve been in the same
structure for 118 years. We have been a department of the Library
of Congress, so not a subagency, not an agency. During that time.

we have served the Administration, and we have had a very close
relationship with Congress on copyright policy, every major revi-
sion since we were created in 1897.

Interestingly, although we perform executive branch functions
and serve Congress, our legal status is unclear. Recently, the De-
partment of Justice, in a music case, in a CRB case, said that when
the Library of Congress is performing copyright functions, it is
clearly in the executive branch. What we are asking you to do is
to codify the structure that we are all comfortable with and have
known for over a century, which is an independent structure where
we are impartially serving everybody. In that model, the President
would appoint the next Register, the Senate would confirm the po-
sition, but the Congress would decide the term, and the person
would be free to advise Congress as well as the Administration,
without interference, in the way that it always has worked. It
doesn’t disrupt the Administration or their IP experts but, in fact,
confirms the coordinating role that now occurs.

In terms of funding, we are two-thirds fee-funded right now. As
I said, we might be able to look at charging for capital costs. Big
copyright owners, large ones, have indicated they’re willing to do
that if they get services back that reflect that investment. But, no
doubt, there will be some capital improvements. What I would sug-
gest is that those capital improvements are a great investment in
the digital economy, though.

Mr. Conyers. Thank you so much. This is your third time before
us. And each time is as good as it gets. And it gets better. I wel-
come your coming before the Committee so much.

And I appreciate your testimony.

Ms. Pallante. Thank you, Mr. Conyers.

Mr. Conyers. Thank you, Mr. Chairman.

Mr. Marino. Thank you.

The Chair now recognizes the gentleman from California, Con-
gressman Issa.

Mr. Issa. Thank you.

Ms. Pallante, it’s good to have you here again. I want to pick up
where the Ranking Member left off because I think it’s very impor-
tant. When you came into office, as you know, I was extremely
pleased. You talked in terms of things that must get accomplished.
But today’s hearing brings us a lot of information about studies in
which you want to do more studies. And you already are a fairly
independent agency, in spite of your lack of certainty in certain
areas. How do we get you from studying to proposing? And how do
we get you from proposing to doing?

Ms. Pallante. Well, we would love to be able to be more hands-
on and help the copyright system function. So that is the vision
that I think

Mr. Issa. No, I’m talking about in your organization. I’m not
talking about your affecting — because you’ve been very good, and
your predecessor was, in telling us what we ought to do in copy-
right law. And I appreciate that. But I looked to the Constitution
before I came in. And I’m okay with our role.

What is it going to take for you to come from studies to real, con-
crete proposals, dollars and cents, “this is what we need”? Look,
you’re the chief executive of an agency. Once the laws are set — and

they are currently set — when you fail to perform, you have two
choices, as a member of your board, so to speak, you have two
choices: Come to us and tell us you don’t have a solution or come
to us and tell us you do have a solution. You’ve come to us with
studies. My question today — and I’m not trying to be in any way
the bad guy here. I support you. I thought you started well, but
now I’m beginning to see, after 3 years, a pattern of we have these
studies and we want more studies. When are we going to see, be-
yond your desire to be an independent agency and have that codi-
fied, when are we going to see solid proposals not on what we do
but on what you can do or what you cannot do?

Ms. Pallante. Thank you, Mr. Issa. We have proposed rec-
ommendations for technology infrastructure and technology rec-
ommendations that are fairly precise. Those were done with the
full public participation of the copyright community. And we pub-
lished that in February. And that was also referenced by the GAO
recently. So I think we have been fairly proactive about saying
what we need. We need our own technology enterprise architecture,
distinct from the Library. We need our own technology infrastruc-
ture, our own technology staff. And we need to make sure we have
targeted IT investments that are not synergized with the Library
mission. So we have been actually very precise about that.

In terms of fees, we have been very precise that we need an up-
dated fee allocation so we can begin to charge for capital costs.

In terms of authority, I am not the chief executive of the agency.
I’m the head of a department which is run by the Librarian of Con-
gress. So the question, I think, that we are asking you is: Do you
want us to put further investments in that structure, or do you
want to give us the authority legally to do something different?

Mr. IssA. Okay. Let me read you back your own words because
I think you’ve given us a lot of what I asked for: One, you don’t
have enough money to update the Copyright Office to the level that
the IT system needs; two, you don’t have internal expertise to up-
date the Copyright Office to that level; and, three, the Librarian is
not going to give it to you, nor do they have it. Is that pretty close?

Ms. Pallante. Almost. What I’m saying is that we don’t have
the authority to have our own IT staff or control.

Mr. Issa. I left that part out.

Ms. Pallante. I would love to

Mr. Issa. I left that part out because if I understand correctly,
you need more money and you need a working IT system and you
lack the expertise in-house and you believe that it does not exist
within the Library system.

Ms. Pallante. It does not. And we do not have the authority to
duplicate it.

Mr. Issa. So the request here today — and I know my time is ex-
piring, Mr. Chairman — the request I see here today, the solid pro-
posal that I want to go away from this with is: One, you need more
money; two, you need an IT system that works; and, three, we have
to figure out how we structure your getting that IT system that
works, either. A, making sure the Library has it, or, B, finding an
agency or a structure that would cause you to do so. Is that cor-
rect?

Ms. Pallante. Yes. Except I would say this. That the IT system
being divorced from the head of the Copyright Office has been a
terrible model.

Mr. IssA. No, no, I understand that. I understand that you are
looking at a structural IT system that meets your needs.

Ms. Pallante. Correct.

Mr. IsSA. I cannot presume today that we would do anything ex-
cept find a way to work it under the current structure, albeit, inde-
pendent of the Librarian’s needs. So, given that, that is what you’re
asking for?

Ms. Pallante. I think that’s accurate.

Mr. IsSA. Mr. Chairman, I have a hundred more questions. But
that is the best answer that I could possibly hope for on one of the
root problems that we have in having the Copyright Office meet
the 21st century needs. And I thank you for your indulgence.
Thank you.

Mr. Marino. Thank you.

The Chair now recognizes the gentleman from New York, Con-
gressman Nadler.

Mr. Nadler. Thank you, Mr. Chairman.

I want to begin by thanking Chairman Goodlatte for conducting
the comprehensive review of copyright law and of the Copyright Of-
fice that we are now concluding. Over the course of these 20 hear-
ings, we have learned a lot about what is working and also what
needs to be improved. It’s now our task to put this knowledge into
action.

Fortunately, the Copyright Office has helped guide us through
these difficult issues. And I appreciate all the assistance that you,
Ms. Pallante, and your staff have provided us throughout this re-
view process. I particularly appreciate your call for the United
States to join 70 other countries around the world in providing fair
compensation to visual artists through a resale royalty and your
comprehensive report on music licensing.

Along with my colleagues Marsha Blackburn, John Conyers, and
Ted Deutch, I recently introduced the Fair Play Fair Pay Act to
correct several longstanding injustices that plague music creators.
This legislation would ensure that all artists are fairly com-
pensated regardless of where their music is played or when it was
recorded and would create a technology-neutral system whereby
Internet radio is on an equal footing with AM/FM, cable, and sat-
ellite services.

Ms. Pallante, you mentioned in your testimony that music licens-
ing issues are ripe for action. Do you believe that Congress should
move forward with legislation, such as the Fair Play Fair Pay Act,
to enact the full public performance right? If so, why do you believe
this is an urgent matter that Congress should address?

Ms. Pallante. Thank you, Mr. Nadler. I think that the Fair Play
Fair Pay Act is an excellent legislative framework. It reflects a lot
of the findings of our study. On the public performance right for
terrestrial radio, in particular, which I understand to be the focus
of your question. I’ll say this, it’s indefensible as a matter of law
and, frankly, embarrassing as a matter of policy that the United
States does not pay public performance — for the public performance

of terrestrial radio to the creators of the music. We are out of step
with the entire rest of the world.

Mr. Nadler. Thank you. I think it’s very well put, very elo-
quently put.

Similarly, do you believe it’s important for Congress to take ac-
tion now to enact platform parity, where all radio services play by
the same rules? If so, why?

Ms. Pallante. Yes. That was one of the major conclusions of our
study. I think it was a conclusion that everybody knew was a long
time coming. We have been regulating the music industry for a
century. We, therefore, have all these disparate rates and grand-
fathered clauses that are really, really difficult to apply, do not
serve the digital economy, do not serve new entrants to the digital
marketplace, definitely do not serve creators. And beginning to look
at parity across platforms is a crucial first step.

Mr. Nadler. It’s a first step toward?

Ms. Pallante. Toward a balanced music bill that reflects the
21st century.

Mr. Nadler. Thank you.

Switching topics, do you think that the time is ripe for legislation
on the issue of resale royalties for visual artists? In your testimony,
you mentioned that several of the recommendations in your past
reports have been included in the bill I introduced this Congress,
the American Royalties Too Act of 2015. Can you explain why this
bill would be a good foundation, in your opinion, if the Committee
were prepared to act?

Ms. Pallante. I think it’s an excellent foundation. And we really
enjoyed doing that study because we, again, are out of step with
about 70 countries around the world in the way that we treat vis-
ual artists. They operate differently under the Copyright Act from
others in that their works are unique. And the value of their works
is tied to the uniqueness, not the proliferation of copies, as in a
book or a film where you’re pricing it according to those copies. So
we would really like to see visual artists generally fare better
under the Copyright Act because their contributions are critical to
our heritage and to the digital economy. We just recently issued a
Federal Register notice asking for even more information about
how photographers, graphic artists, and illustrators are faring
under the Copyright Act as a follow-on process to your request for
that study.

Mr. Nadler. Thank you. Going back to music, online music serv-
ice providers today struggle to obtain accurate and comprehensive
ownership information about the music on their services. Often
such information is incomplete, not up to date, simply unavailable,
or not in a format that is universally useable. The lack of owner-
ship information prevents artists and composers from being paid in
a timely manner. It also disincentivizes new service providers from
entering the digital music space because of the threat of statutory
damages for failure to appropriately license or pay creators and
other copyright holders when they don’t know who they are. What
reforms do you think might be appropriate to remedy this situa-
tion?

Ms. Pallante. Yes, so, again, another major focus of our public
process was data. Data is everything to the digital music market-

place. In some instances, there is data. And, in some instances,
there is a lack of coordination of data. In other words, sometimes
there’s data missing. Sometimes it’s the coordination of existing
data that’s the problem. So we proposed a central authoritative
public database. We recommended that it be operated by a non-
profit entity that is government mandated, along the lines of
SoundExchange. Licensees could pay royalties for the unidentified
works into that entity, and that would solve their exposure to li-
ability.

Mr. Nadler. Thank you. Let me just thank you for your testi-
mony and for your work.

And I yield back.

Mr. Goodlatte [presiding]. Thank you. Register Pallante. I’m
going to go ahead and give my statement since I’m late getting
here, and then I’ll go straight into my question, but a brief state-
ment.

Two years ago, this Committee began the first comprehensive re-
view of our Nation’s copyright laws since the 1960’s. During these
2 years, we have had a total of 20 hearings with 100 witnesses, had
hearings that covered broader topics, such as the role of technology
and copyright in our economy, to more specific topics, such as the
scope of copyright protection and fair use.

Our first witness was the Register of Copyrights, Ms. Pallante.
She returns this morning and has given her perspective on what
the Committee has learned over the past 2 years and to update us
on the in-depth studies that the Copyright Office has completed
during this time. The Committee recognizes the strong, in-depth
analysis routinely conducted by the Copyright Office. The Com-
mittee has always expected the advice of the Register being pro-
vided to Congress on copyright policy issues and the role of the
Copyright Office itself to come from her independent perspective
without filtering or direction from others. The Committee welcomes
her forthrightness about the challenges her office faces, as well as
what options Congress should consider in order to meet her legal
requirements and the needs of the copyright community.

As the copyright review hearing process proceeded, each witness
was essentially limited to speaking on the topic of that particular
hearing. However, there are a few participants in the copyright
system that care about only one copyright issue. Over the next sev-
eral months, the Committee will be reaching out to all stakeholders
to invite them to share their views on the copyright issues we have
examined over the course of our review so far as well as any others.
Even since we began our review, there have been several new
Copyright Office studies, new technologies, court decisions, and
even changes in business models. So we look forward to hearing
from stakeholders on all of these important issues. During this
process, we also encourage all participants in the copyright system
to continue their dialogues with each other. Progress in copyright
policy requires all parties to work together. Although it is certainly
easier to discuss copyright policy with a traditional ally, copyright
policy will not advance unless the lines of communication are open
among all participants.

Finally, I’m going to my questions.

You recently released a comprehensive music study, recom-
mending a series of changes to the music licensing system to im-
prove it. Is improving the existing music licensing system pref-
erable to shifting it to a free-market system with robust
antimonopoly controls so that market forces determine prices rath-
er than the government?

Ms. Pallante. The goal is most definitely ultimately the free
market. I would completely agree with you on that. What we did
was take a century-old regulatory process and try to move it in
that direction incrementally but also progressively. So if you want
to completely dismantle all regulation, many people would be very
supportive of that. I think our concern would be the timetable for
doing that and how small actors would fare without the regulatory
protections that have served them and consumers fairly well.

Mr. Goodlatte. Smaller copyright owners and users have indi-
cated that they struggle with a complex copyright law that is dif-
ficult to navigate. Is overall clarification of the existing statute just
as important as updating the statute itself?

Ms. Pallante. Yes. There is no question that copyright law
touches everybody, everybody in a modern culture, in a modern na-
tion, in modern global world. And it’s unlike other laws in that re-
spect. It affects everybody. So that is something that our Office
would presumably be able to help the Congress with by taking on
more of the education and guidance role.

Mr. Goodlatte. The Committee has heard numerous and some-
times conflicting comments about copyright remedies that range
from a not very functional system to extreme financial penalties di-
vorced from actual harm. Does this wide range of comments simply
reflect different opinions? Or can everyone’s comments all be accu-
rate, indicating that we have a remedy system that is not focused
properly?

Ms. Pallante. Everybody is right. I think our remedies are crit-
ical to the functioning of the Copyright Act. You can’t have exclu-
sive right, a system based on exclusive rights without meaningful
remedies. They would be hollow without remedies. Can we provide
more guidance to courts? Possibly. Can we make licensing work
better so that we’re not in litigation and so that remedies play a
more productive role rather than a hammer? Yes. But whether it’s
actual damages, injunctions, or statutory damages, they have been
with the Copyright Act since 1790 in some instances. So it’s very,
very, I would be very, very careful about amending that quickly.

Mr. Goodlatte. This Committee traveled to New York City for
a field hearing on first-sale issues. There are clear differences be-
tween analog and digital items. But how should the law treat
mixed goods?

Ms. Pallante. This is a great instance of our Copyright Act
intersecting with what our consumers want. And we do live in a
global marketplace. People do want to obtain the best prices and
the best goods. There is a lot to be said for that model. And I think
our stakeholders who are copyright owners are adapting to that. So
I would probably monitor that situation at this point. I don’t see
a need for congressional legislation, anyway, at this point.

Mr. Goodlatte. Thank you. Those are my questions. We are
going to have to stand in recess for the speech hy the Japanese
Prime Minister.

However, we do have time to take one more.

And so the Chair recognizes the gentlewoman from California,
Ms. Lofgren, for her questions.

Ms. Lofgren. Thank you, Mr. Chairman.

I appreciate this hearing. And I just wanted to make a quick
statement. In your testimony, there’s some things I agree with.
There’s some things that are reminiscent of SOPA. And I just want
to state for the Netroots that, to the extent that there are SOPA-
like elements. I’m still against them.

I want to talk about the IT system. I agree that the IT system
needs to he updated. But I want to talk about the whole idea of
having taxpayer money allocated to this function. I realize from
your testimony the constraint really has been created by us be-
cause of the forward funding. But the USPTO budget is $3.2 bil-
lion, and it’s 100 percent fees. And it just seems to me that that
ought to be the model here. Your budget is much smaller. But
there is no reason why the taxpayers should be funding this any
more than the taxpayers should be funding the Patent and Trade-
mark Office. I just think that it’s possible to do. We have very suc-
cessful industries in the content area. And I just am eager to work
with you to explore that further.

I also want to talk on section 1201. And I was looking up and
down the dais here, realizing there’s only a few of us left who were
actually here when the DMCA was adopted. And 1201 caused me
a lot of heartburn at the time. And it still does. And so here is one
of the questions I have — and I had then — which is, do you believe
that fair use is a defense to circumvention under 1201?

Ms. Pallante. I do not believe that the way you enacted the
statute, that chapter 12 is subject to section 107. It is not part of
the core Copyright Act. So, no, not legally.

Ms. Lofgren. I agree with you. And it’s a major problem. Be-
cause without a fair use exception, the digital locks could be used
to eliminate a fair use or an otherwise authorized use. Digital locks
could be used to perpetuate only monopolistic practices, not content
at all. And so I’m hopeful that as you are thinking about 1201, that
we think, not just about the exceptions — and I think your idea
about forwarding the approval — of prior approval, but as the ex-
emptions have proliferated, I think it tells us something about the
underlying defect in the statute.

Now, sometimes when you say this, people assume, well, you’re
for infringement. I’m not actually for infringement. But I am for
eliminating monopolistic practices that hide behind copyright. And
I am for not using copyright to cripple technology innovation that
has nothing to do with protecting copyright. And I’m also for mak-
ing sure that the fair use exception is not destroyed through mis-
use of technology.

Now, I was interested in your cybersecurity exception issue and
the need to expand it. In your mind, what would a cybersecurity
exception look like? What would it encompass?

Ms. Pallante. I would really want to talk to experts in that area
before commenting on that.

What I can say with confidence is that having cybersecurity re-
search needs subject to a 3-year exemption process under the
DMCA conducted by the Copyright Office and the Library is prob-
ably not the best way to go for the Nation.

Ms. Lofgren. I very much agree. I recently met with some re-
searchers, academically based, and I think they had probably been
over to the Copyright Office as well. And they are good guys. They
are exploring cybersecurity issues. And to do so, they have to actu-
ally do some breaking. And we want them to because we want to
find out what the holes are. But they’re very concerned. They’re a
law-abiding group. They don’t want to be behind a law violation.
Have you set up a group that would help you to think about this
exception?

Ms. Pallante. Nobody has asked us to look at the exception, but
we would like to do that. And it would be an interesting group be-
cause it would be very much in need of technical experts and secu-
rity experts and people who are really looking out for the security
interests of the United States.

Ms. Lofgren. Thank you, Mr. Chairman.

I see my time is about to expire. And the Committee needs to get
over to the floor to listen to the Japanese Prime Minister.

Mr. Goodlatte. The Chair thanks the gentlewoman.

And the Committee will stand in recess until noon. And we
thank Ms. Pallante for her patience.

[Recess.]

Mr. Goodlatte. The Committee will reconvene.

When the Committee recessed. Members were asking questions
of our star witness, and we’ll resume by recognizing the gentle-
woman from California, Ms. Chu, for 5 minutes.

Ms. Chu. Thank you, Mr. Chair.

First I’d like to enter into the record statements from the Copy-
right Alliance and Creative Future on their support for a strong
copyright system. I’d also like to enter a statement from Sound Ex-
change into the record.

Mr. Goodlatte. Without objection, they will be made a part of
the record.

[The information referred to follows:]

CreativeFuture

ifVKnAstfcm.

March 10, 2015

Dear Members of Congress,

We are members of the creative community. While our political views are diverse, as creatives, there
are a few core principles on which we can all agree. We appreciate the opportunity to share our views
with the 114th Congress.

We embrace the internet as a powerful democratizing force for our world and for creative industries.
We recognize its ability to inspire positive change and improve lives. In our creative industries, the
internet has helped to advance creativity by removing barriers to entry for newcomers, fostering a
dialogue with fans and audiences, and providing numerous additional ways to reach them. The internet
holds great potential to expand creativity and free expression.

We embrace a strong copyright system that rewards creativity and promotes a healthy creative
economy. The internet is a revolutionary platform that connects the world. The incredible cultural and
economic value that it delivers to billions of users is based In very large part on the efforts of creative
content makers whose livelihoods depend on being compensated for their efforts. Technology
companies are making massive profits from creatives' contributions to the internet's growth. It Is not
too much to ask that content creators should be compensated for the value they bring.

We proudly assert that copyright promotes and protects free speech. Freedom of speech and freedom
of expression go hand in hand with the freedom to create and to preserve the value and integrity of
what one creates. The copyright clause of the Constitution is not in conflict with the First Amendment.
To creative people, self-expression Is deeply personal. It is at the heart of everything creatives do. We
view any effort to diminish the rights of creatives in the name of "free speech" as cynical and dishonest.

Copyright should protect creatives from those who would use the internet to undermine creativity.
The internet can be a great tool for creatives, just as it can be a tool for science, education, health care,
and many other disciplines. However, when misused, it can harm creativity and stifle freedom of
expression. President Obama, who has consistently advocated for a free and open internet,
acknowledged at Stanford last month, "It's one of the great paradoxes of our time that the very
technologies that empower us to do great good can also be used to undermine us and inflict great
harm." Pirate site operators who profit from stolen creative works with impunity are one obvious
example of the latter.

Creatives must be part of the conversation and stand up for creativity. Some organizations and
advocates, who in many cases are funded by technology companies, repeatedly claim to be pro-
creatives and pro-audience to mask their own self-serving agenda. They denigrate or block effective
efforts to preserve and promote creative content, including enforcement of existing laws and voluntary
industry initiatives. The creative community is rightfully wary of any company or organization that claims
to be "against piracy" when their actions do not match their words.

5757 Wilshire Boulevard, Suite 900, Los Angeles, CA 90036
+^ -323-591 -3000 ! v^'vw.C r eativeFutu re. org

CreatIveFuture

nvtove^fcm.

There is no "left" or "right" when it comes to respecting copyright. The creative community stands
united in support of a copyright system that has made and continues to make the United States the
global leader in the creative arts and the global paradigm for free expression. Our copyright system is
not perfect but, like democracy, it is better than the alternatives. It works. We urge Congress to resist
attempts to erode the right of creatives to determine when and how they share their works in the global
marketplace.

Thank you for the opportunity to contribute our views.

Kate Abernathy
David Akins
Bill Allen
Gilbert Alloul
Hilton Als
Marilyn Atlas
Eli Attie

Jonathan Bader
Steve Baldikoski
Mark Balsam
Carol Baum
Peter Baxter
Jason Beck
Dion Beebe
Jessica Bendinger
Alec Berg
Albert Berger
Shari Springer Berman
Cary Bickley
Tony Bill
Julia Bloch
Robert Bookman
Bill Borden
Marty Bowen
Paul Brooks
Darrell Brown
Erin Burnbridge
Allison Burnett
T Bone Burnett
Virginia Canfield
Anne Chaisson
Justin Chambers
Ruth Charny

Nicolas Chartier
Tena Clark
Hayden Clement
Christopher Cleveland
Bruce Cohen
Ted Cohen
Nancy Collet
Jan F. Constantine
Steve Cooper
Cindy Cowan
Pat Crowley
Caitlin Dahl
Melinda Dahl
Mark Damon
Jonathan Dana
Annette Davey
Rachel Davidson
Jonathan Dayton
Martha De Laurentiis
Deborah Del Prete
Pen Densham
Catherine Dent
Myriam Despujoulets
Joann DiBuono
Danny Dimbort
Kate DiMento
David Dinerstein
Samuel Douek
Dennis Dugan
Michael Duggan
Bill Duke
Russ Duncan
Guy East

Sarah Eaton
Peter Eliasberg
Cassian Elwes
Alison Emilio
Robert Emmer
Susan Emmer
Jacob Estes
Valerie Paris
Katherine Fausset
Paul Federbush
Jason Felts
Susan Ferris
Adam Fields
Jordan Fields
Wendy Finerman
Natalie Fischer
Kerthy Fix
Richard Foos
Brooke Ford
Gary Foster
Cedering Fox
Elizabeth Frank
Cecilia Friederichs
Daryl P. Friedman
Coryander Friend
David Friendly
Bradley Gallo
Sid Ganis
Henny Garfunkel
Shannon Gaulding
Lori Getz
Mark Gill
Darrien Gipson

5757 Wiishire Boulevard, Suite 900, Los Angeles, CA 90036
+1 -323-591 -3000 I v^vw.C r eativeFutu re. org

CreatIveFuture

ifVKnAstfcm.

Richard Gladstein

Hayes Jackson

Todd Lieberman

Patricia Glaser

Richie Jackson

Jeff Lipsky

Ed Glass

Jenny Jacobi

Ellen Little

David Glasser

Stephen Jacoby

Robbie Little

Wyck Godfrey

Dan Jinks

Matthew D. Loeb

Dave Goetsch

Gil Junger

Michael London

Kevin Goetz

Ken Kamins

Rob Long

Neil Goetz

Tony Kaye

David Lonner

Josh Goldstein

Michael Kelly

John Lyons

Julie Goldstein

Jordan Kerner

Bill Macdonald

Joe Goodman

G Kettler

Mike MacMillan

Keith Gordon

Callie Khouri

Mike Marcus

Mark Gordon

Chloe King

Susan Margolin

Carolyn Govers

Sam Kitt

Sean Marks

Peter Graves

Jay Kleckner

Donald Martin

Dan Green

Timothy F. Knowiton

Craig Mazin

Jeffrey Greenstein

Hawk Koch

Valerie McCaffrey

Janet Grillo

Pamela Koffler

David McIntosh

Taylor Hackford

Marian Koltai-Levine

Yael Melamede

James Hacking

David Koplan

Chris Meledandri

Marc Halperin

Adam Krentzman

Michael Menchel

Marla Halperin

Brad Krevoy

Barry Mendel

Renny Harlin

John Krokidas

Christian Meoli

J. Todd Harris

Scott Kroopf

Christian Mercuri

Mary Harron

Bob Kushell

Nicole Miller

John Hart

David Ladd

Christian Moerk

Jere Hausfater

Susan B. Landau

Princess Monique

Michael A. Helfant

Jennifer Lane

Kathy Morgan

Doug Hensen

David Larkin

Jo Moulton

Lisa Henson

Joe Lawson

Carl Mulert

Bel Hernandez

Tracie Laymon

Kiersten Myers

John Hersker

Adam Lazarre-White

Diane Nabatoff

Marshall Herskovitz

Karrie League

Stephen Nemeth

Paul Hertzberg

Tim League

Beverly Nero

James Hirsch

Adrian Lee

Daniele Neuharth

Michael Hoffman

Spike Lee

Rick Nicita

Marc Hofstatter

Michael Hogan

Joanne Horowitz

Lynette Howell

Alan lezman

Michael A. Jackman

Adam Leipzig . . ... .

Marcus Nispel

Kasi Lemmons ^

David 0 Farrell

Peter Lenkov „ .

Brian 0 Shea

Avi Lerner ,

Jerry Offsay

Mitch Levine ^ ^ ,

Veronica Ortiz-Calderon
Kevin Lezak ... ^

Alison Owen

5757 Wilshire Boulevard, Suite 900, Los Angeles, CA 90036
+1-323-591-3000 1 www.CreativeFuture.ora

CreatIveFuture

nvtovetfcm.

Andrew Oyaas

Jay Roth

Claire Taylor

Robert Papazian

Bill Rouhana

Dendrie Taylor

Luke Parker Bowles

Morris Ruskin

Graham Taylor

Andy Paterson

Nina Sadowsky

Michael Taylor

Jamie Patricof

Kent Sanderson

Michele Tedlis Sorbo

MJ Peckos

Ted Schachter

Andrew R. Tennenbaum

Zak Penn

Julian Schlossberg

Kenji Thielstrom

Dinah Perez

Peter Schube

Andrew Thomas

David Permut

Teddy Schwarzman

Anne Thomopoulos

Tim Perrell

Robert Score

Alison Thompson

Carolyn Pfeiffer

Lloyd Segan

Rawson Marshall Thurber

Pamela Pickering

Andrea Seigel

Andrew Tiedemann

Marguerite Pigott

Dominic Sena

Jennifer Todd

Lou Pitt

Josh Shader

Gary Toebben

Mark Pogachefsky

Michael Shamberg

Michael Tronick

Fredell Pogodin

Robert Shapiro

AlexTse

Gavin Polone

Jeff Sharp

LarryTurman

Amy Powers

Meyer Shwarzstein

Jon Turtletaub

Dawn Prestwich

Michelle Shwarzstein

Barbara Twist

Jean Prewitt

JonI SIghvatsson

Harry J. Ufland

Noah Pritzker

Nigel Sinclair

Jared Underwood

John Ptak

Julie Sisk

Christine Vachon

Robert Pulcini

Martha Smith

Jeff Vespa

Keri Putnam

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April 28. 2015

The Honorable Robert Goodlatte
Chairman

House Committee on the Judiciarv
2138 Rayburn House Office Building
Washington, DC 2051 5

The Honorable iohn Conyers, Jr.

Ranking Democratic Member
House Committee on the Judiciary
2142 Rayburn House Office Building
Washington. DC 20515

Dear Chairman Goodlatte and Ranking Member Conyers;

America has the most innovative and influential music culture In the world, but despite its
tremendous leadership, our Copyright Office is still operating with resources and an infrastructure from
the early part of the twentieth century, a time long before the digital revolution in music. American
recording artists and the millions of Americans who treasure music need and deserve a Copyright Office
that can keep pace with our musicians' remarkable creative output.

SoundExchange is an independent, nonprofit organization founded by-and for-the recording
industry. As you know, we were created to help foster the growth of digital music services, and we are
helping to usher the music industry into the age of digital streaming. We have therefore watched with
great interest over the past two years as Members of Congress have questioned the governance
structure in which the Copyright Office currently operates, considering constitutional, budget, and
information technology management concerns.

There is no remaining question that the Copyright Office must be permitted to evolve and adapt
to the realities of the digital marketplace. Congress has an historic opportunity, one for which your
committee already has laid important groundwork. Providing the means for the Copyright Office to be
more efficient, flexible and responsive to the changing needs of music creators and the users of their
work will help everyone in the music ecosystem in their efforts to thrive In the digital environment. A
modernized Copyright Office would be a vital partner to the entire universe of copyright industries that
added nearly $2 trillion to the U.S. GOP in 2013.

In the course of the Committee's consideration of modernization of the Copyright Office, a number
of possibilities for its future have been presented. We believe the path that would best enable the
Copyright Office to serve lu mission is giving it independence from the Library of Congress and a leader
appointed by the President and confirmed with the advice and consent of the Senate. This would
enable a more efficient and responsive organization to provide legal and policy expertise to Congress,
federal agencies, and the public; allow the Office to be a more active and effective leader on domestic

and international copyright issues; and quiet constitutional challenges that, as the Register has staled,
can compromise confidence in our copyright system.

This independence must, of course, be coupled with resources adequate to build the
infrastructure necessary for a truly modern Copyright Office. Making the Copyright Office an
independent agency would also have an immediate Impact on the oversight and development of the
extensive information technology systems required to fulfill its mission. We agree with the recent GAO
report that the Copyright Office is hindered by significant challenges related to the Library of Congress'
dehdencies in fT governance. We believe the ability to manage vast amounts of data within a modern IT
system is one of the most critical functions of the Copyright Office. However, It has been hamstrung by
the lack of a Library-wide IT plan for a number of years.

While the GAO report correctly assessed the IT problems the Copyright Office faces, it came to the
absolutely wrong conclusion about how to address them. We strongly disagree with the report's
conclusion that the goal should be to integrate the Copyright Office IT systems into a more centralized
Library of Congress system. The IT objectives of the Library and the Copyright Office are dramatically
different and cannot be simply "integrated." Addilionally, centralization is counter to technology
systems in the private sector that are instead trending toward more distributed and federated
architectures. The American music industry and its consumers need a Copyright Office that Is readily
able to service its mission and the people and industries that depend upon it Centralizing this function
further within the Library of Congress would be moving In exactly the wrong direction.

The entire landscape of the U.S music industry has changed in the past decade-and continues to
change nearly every day. SoundExchange exists to empower this change and to ensure that artists and
creators are effectively, fairly and efficiently compensated for the music at the heart of this evolution.
The Copyright Office-at the heart of our copyright and music ecosystem-needs to be at the cutting edge
of this change, and time is of the essence.

We urge Congress to act swiftly to modernize the Copyright Office and give American musicians
and music consumers the type of Copyright Office that is essential to our innovative musical industry,
evolving culture and progress as a nation.

Sincerely,

cc. Members of House Committee on the Judiciary

Ms. Chu. Th a n k you.

Mr. Chair, thank you for holding this important hearing today.
After speaking with so many diverse stakeholders from the Los An-
geles region and throughout the country, it’s clear to me that we
have to bring the Copyright Office into the modern age. We need
a Copyright Office that serves the needs of owners, users, and the
American public. And that includes giving the Office independence
and sound legal ground to perform its core mission to administer
the Copyright Act and resources to invest in a workable IT infra-
structure that makes sense for a creative future. I look forward to
working with you, my colleagues, on the Committee, the Register,
and the impacted stakeholders to produce a viable solution.

Register Pallante, you and your team have done such a great job
despite the challenges you faced from limited resources, staffing
issues, to outdated technologies. It seems to me that you’re faced
with the challenge of running an analog office in a 21st century
world. In addition to this, you’re limited in your decisionmaking,
given how the Office is currently structured under the Library of
Congress.

When Professor Brauneis last testified in the Committee, he
urged Congress to give serious thought to the vehicle of an inde-
pendent agency.

What are your thoughts to creating an independent agency in-
stead of placing the Copyright Office within the Department of
Commerce or the Patent and Trademark Office?

Ms. Pallante. Thank you. Dr. Chu, for the questions, and thank
you for recognizing my staff as well. I don’t know how I’m so lucky
to have the staff that I do.

I think that those questions go right to the heart of what copy-
right is about. So if the Office is in the Commerce Department, it
clarifies a few things. It clarifies what the Department of Justice
has said is the case, which is namely that we are by and large an
executive branch agency when we are performing copyright func-
tions. And since all we do in my shop in the Library is copyright
functions, it’s clear that we are the part of the Library that is en-
gaged in executive branch functions.

So the question becomes, does it matter? And what does that
mean for the Library, and what would one lose if we were in the
Commerce Department?

I think the principal thing that you lose as the Congress is the
unfettered and impartial advice of the Copyright Office, which you
have had since 1897. I think this Congress and all Congresses be-
fore it have been very hands-on in copyright policy. The House in
particular has led the way in discussions about what a balanced
Copyright Act should look like from the very beginning. And I per-
sonally would be heartbroken to see that part of our job com-
promised, diluted, or even eliminated by putting us only in the ex-
ecutive branch.

That led us to the conclusion that an independent model would
really honor what we have always been, and that means that we
have served Congress impartially, and we have also, though, sup-
ported the Administration. In treaties, in trade, we work with the
Department of Justice very carefully because we administer the
law. And we didn’t want to disrupt what’s already the case in the

Administration, meaning that the Congress has provided that the
Register has a statutory relationship with the Under Secretary,
who heads the Patent and Trademark Office, and a statutory rela-
tionship with the IPEC, that is in the Executive Office of the Presi-
dent. The only issue is that the Register is not at the same level
and runs the copyright system and the Copyright Office. So, in
looking at potential conflicts with the Library, because the Library
has a library mission and a library view of copyright law, in the
future and looking at the kinds of resources and focused technology
and staffing that we need, it led us to believe that separating it out
but honoring the tradition as leanly as possible was the right an-
swer.

Ms. Chu. Thank you for that.

I’d also like to ask a question about the small claims process that
could be an alternative to Federal court. I hear from so many small
business owners, and the general consensus is that going to Fed-
eral court is very, very costly. And that is why I believe we must
establish a small claims court for creators that need it the most.

Can you discuss how a system could be established and how it
will function alongside the Federal court system?

Ms. Pallante. Yes. Thank you.

So this Committee requested a report from us, and we did a very
public study for over 2 years about what a small claims process
could look like. The overwhelming response of the creative commu-
nity is that they are priced out of Federal court, even where statu-
tory damages are available. And, without meaningful enforcement
or resolution of contractual issues in cases, not necessarily full-
blown major precedent-setting litigation, but just trying to resolve
gridlock and claims, they need something else. And the small
claims process that we developed constitutionally would have to be
voluntary. Both parties would have to agree to it. We think both
parties would in the circumstances that we’ve laid out. It would be
capped at $30,000. That’s certainly up to the Committee to change
or amend or further deliberate on. We thought that number came
out of our process. And we think it’s critical because we don’t want
a Copyright Act in the 21st century that provides exclusive rights
and no way to effectively enforce them, license them, protect them,
and monetize them.

Ms. Chu. Thank you.

I yield back.

Mr. Goodlatte. The Chair recognizes the gentleman from Michi-
gan, Mr. Trott, for 5 minutes.

Mr. Trott. Thank you. Chairman.

I want to thank our witness this morning, Ms. Pallante. I’ve been
looking forward to your testimony. I’m new here in Congress, but
everyone I’ve spoken with has commented to me on how insightful,
helpful, and pragmatic some of your suggestions and insight has
been for this Committee, and one of the few people that I’ve heard
about since being here that everyone says great things about, and
it doesn’t happen too often in this town.

Ms. Pallante. Thank you. Thank you so much.

Mr. Trott. So thank you for being here.

I agree with your earlier comments about how you envision reor-
ganizing the Copyright Office and the independence and the auton-
omy you need.

At a high level, what additional costs — you know, how much do
you think it would cost to do it. Particularly how much in tech-
nology needs to be invested, and what’s the cost there? Do you en-
vision the new Office, as reorganized, would be giving guidance on
issues that come up, and would you also envision new positions like
a chief technology officer? At a high level, you know, what’s it look
like, and how long would it take to accomplish?

Ms. Pallante. Thank you. Thank you for your kind words about
the Office.

I think you have a big opportunity here to be innovative and cre-
ate something that you haven’t really had before in the Federal
Government. So small, nimble, innovative, forward-thinking, flexi-
ble agency. Independent, in so that it can serve the Congress as
well as the Administration, protecting the impartial role that we’ve
always had. To do that, I have said that we need to have a staff
that is probably more and more data- and tech-driven. Right now
I have created a CIO position. I did that last year and hired a dep-
uty as well to begin to do more planning and take more direct re-
sponsibility.

What I think you need to know is that when the GAO came in
and audited the Library’s IT and they found severe deficiencies —
it’s a public report — that was not unknown to us. A lot of people
knew about it. But, unfortunately, I think in making the 39 rec-
ommendations to the Library that they made, they also said you
shouldn’t have multiple CIOs in one agency. You shouldn’t have
multiple tech staff in one agency. And, although they didn’t say it
that precisely, it’s very clear from reading the report that that’s
their recommendation.

What I said is: It hasn’t worked. We’ve been in the Library’s IT
system for quite some time. We are not a primary customer. The
Library’s mission is their first and foremost mission, and I think
it should be. But it makes it impossible for me to move forward if
the steps I’ve taken to develop a small IT staff with hopes of build-
ing out a better one — and the IT staff includes data people, which
are really business people. So what kind of metadata are they
using in the music community? And these are our customers. It’s
hard for me to build that out if we’re getting the opposite sugges-
tion from auditors.

And, to be fair to the Library, they’re in a difficult position be-
cause they’re being told from me that’s not going to work and from
the auditors that that’s what they should do. So that’s why I asked
this Committee to please weigh in on it.

Mr. Trott. And the timing, how long do you think once we have
plan in place and you get some direction and the budget if you had
to

Ms. Pallante. It’s a great question. I’ve thought about this a lot
and I’ve talked to the stakeholders about this. I hope this isn’t too
simplistic. I would hope the Committee would do what it thinks is
right for the copyright system by elevating it appropriately to re-
flect the significance of the system so that it’s no longer just a de-
partment in the Library.

And then I would suggest that you have an effective date that
allows you a transition plan to figure out what part of the budget
should come from fees, what the 3- to 5-year costs are, what the
long-term costs are. And I think it’s an exciting situation because
I think in a modern government you should expect a lean, small
agency to borrow and purchase services from across the govern-
ment. Like, the Office doesn’t need to have its own HR department.
It doesn’t necessarily need to create data standards from thin air.
So I think it could go actually fairly innovatively because our cus-
tomers are in that space now.

Mr. Trott. Great. Well, thank you. I agree with everything you
said, and the only disappointment is, with all those tech savvy peo-
ple, you’re going to need you probably don’t need someone like me
that has Betamax and tape cassettes still.

So, you know, one of the things that I’ve — since I’ve been here
there have been a number of groups have come and talked to me
about the performance rights issue. And there was an earlier ques-
tion, and I can’t discern necessarily whether you think the fair play
legislation that’s been introduced is going to solve that problem,
but, you know, how should I approach that? Because you have the
strain necessarily between the broadcasters and then, you know,
the artist who, you know, believe in a willing seller/willing buyer
concept.

How should that be looked at by Members, in your opinion?

Ms. Pallante. Well, almost always our Office finds the right bal-
ance in these discussions because almost always everybody has a
legitimate point of view. I have to say, our Office has been looking
at the public performance right for over 20 years, and it is an ex-
ample of an issue where we are just on the wrong side. We are out
of step with virtually every industrial country in the world, and it
is, as I said earlier to Mr. Nadler, it’s just frankly indefensible as
a matter of policy that we are not paying creators when their songs
are played on radio. They’re subsidizing the profits of broadcasters
in that particular issue. There are plenty of issues where broad-
casters have legitimate rights and they should be looked at, but
that is not one I agree with them on.

Mr. Trott. Great. Thank you for being here today.

I yield back. Thank you. Chairman.

Mr. Goodlatte. The Chair thanks the gentleman.

Recognizes the gentleman from Florida, Mr. Deutch, for 5 min-
utes.

Mr. Deutch. Thank you, Mr. Chairman.

Mr. Chairman, first I’d like to join the chorus of voices heaping
praise on Ms. Pallante and her office. Thank you for your leader-
ship, your thoughtful, very thoughtful, analysis of these issues and
the tireless efforts that you and your staff put in in really strength-
ening the intellectual property of our country. We appreciate it.

I want to follow up on this issue of independence, and the under-
standing that I have that a lot of us I think have come to conclude,
certainly from today, that the Register would be in a better posi-
tion — significantly better position if it gained more independence
through Copyright Office modernization, which I think is one thing
where there’s broad agreement and I hope that we move forward
on.

But following up on this issue, when you were here with us last,
you somewhat reluctantly discussed the challenges created by the
fact that the Copyright Office is forced to rely on technical infra-
structure at the Library of Congress, including its network servers,
telecommunications and security operations, in spite of the vastly
different mandates that the Library and the Copyright Office have.
And you touched on that a bit here today.

It seems to me like your inclusion under the umbrella of the Li-
brary of Congress, however well intentioned, is hampering the
work that you do beyond simple technical challenges. It’s not just
about the technical issues. And I’m sure that — and I acknowledge
that your response has been somewhat limited here today, but I
will simply say on your behalf, if I may, that it’s hard to see how
the Copyright Office can rise to the many challenges of the 21st
century work that you do without dramatically more independence
and dramatically more flexibility. I would just make that point.

I also wanted to follow up on Mr. Trott’s last point. One of the
primary recommendations of your recent music licensing study is
that Congress should adopt a uniform market-based rate setting a
standard for all government rates, and I agree with that. And
when the Music First Coalition showed me this graphic that we’re
about to hold up that depicts the current system for the various
forms of radio, it solidified for me how unnecessarily complex and,
in fact, as you’ve just pointed out, how unfair the current system
is. You spoke about the — I mean, your words, that it’s indefensible
that we don’t pay creators when songs are played on the radio. I
wholeheartedly agree with that.

Do you agree that all forms of radio should be governed by the
same fair-market-value rate standard?

Ms. Pallante. I do. And I think what we’re suggesting in our
report is that we move toward the free market and we not sub-
sidize or grandfather in oddities that are a reflection of a century-
old system that’s been cobbled together.

Mr. Deutch. Great. And, Mr. Chairman, I’d like to submit for
the record a considerably smaller version of this graphic that I pre-
sented.

[The information referred to follows:]

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Mr. Deutch. Thank you.

And, Ms. Pallante, when you appeared before the Committee in
March of 2013, you and I had an exchange about how to keep the
copyright review effort timely and relevant, and you said at the
time that although we love the trade associations that visit us on
a daily basis

Ms. Pallante. We do.

Mr. Deutch [continuing]. As we all do, getting around them, as
you said then, sometimes in getting to other kinds of creators
would really by instructional. So, you said, I would also probably
recommend that if we were to have roundtables, that we get of
Washington a little bit, go somewhere where people make from a
living from writing songs at their kitchen table.

I wonder if you’ve had an opportunity to follow through on that
and meet with real working creators outside of Washington.

Ms. Pallante. Yes, in fact, and I remember that exchange. In
fact, that’s been the most inspiring part of the work for me for the
last 2 years. I have met with recording artists across the country
in multiple cities, and to the Recording Academy’s credit, they did
not filter or script those meetings. I think there was some squirm-
ing at times, but it was a very inspiring set of meetings because
I was really hearing from creators about why they make the livings
they make, why they care about culture, why they care about cre-
ativity; how incredibly disciplined they are and trained in their
various disciplines; and how they really just want to make sure
that they are credited and compensated fairly.

Mr. Deutch. And, ultimately, as we go about our work here, it
is that commitment to their craft, the discipline that they exercise,
that not only wants them to be compensated, but I think requires
us to fairly compensate them, ensure that they are fairly com-
pensated for the work that they do.

Ms. Pallante. I agree with you.

Mr. Deutch. Thanks, Miss, Pallante. I yield back.

Mr. Collins. Gentleman yields back.

And now, at this time, the Chair recognizes himself for his ques-
tions. And before I start I want to ask unanimous consent to — and
put into the record Intellectual Property Guidelines for the 114th
Congress. It’s an open letter.

Hearing no objection, so ordered.

[The information referred to follows:]

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Dear Members of Congress,

C ongratulations to the Members of the 1 14th Congress! It is
an exciting time for America, particularly In the knowledge-
based economy. American entrepreneurship, ingenuity and
creativity lead the world, and we believe that Intellectual Property
Rights are the key to maintaining global competitiveness.

The undersigned organizations represent millions of Americans
through both state and national advocacy or engage in rigorous
research and educational work on intellectual property rights.
We would like to shar-e with you our strong support for all types of
intellectual property, by providing you with the following information
and guidelines that our respective organizations look to when we
consider intellectual property.

Intellectual Property Rights Are Grounded in the Constitution

The Founding Fathers recognized the importance of IP in Article
1, Section 8 of the Constitution: To promote the Progress of
Science and useful Arts, by securing for limited times to Authors
and Inventors the exclusive Right to their respective Writings and
Discoveries."

This clause, articulated by the founders, is rooted in the notion
that the best way to encourage creation and dissemination of new
inventions and creative works to the benefit of both the public
good and individual liberty is to recognize one's right to his or her
intellectual property.

Intellectual Property Rights Are a Fundamental Property Right
Deserving the Same Respect as Physical Property

James Madison elaborated on this provision of the Constitution in
Federalist Paper #43; with regard to intellectual properly, as with
all property rights protected in the common law. "It]he public good
fully coincides with the claims of individuals."

Intellectual Property Rights Promote Free Speech and
Expression

Strong IP rights go hand in hand with free speech as creators
vigorously defend their ability to create works of their choosing,
free from censorship.

By affording innovators and creators the ability to support
themselves, IP rights promote free expression unencumbered by
government.

Intellectual Property Rights Are Vital to Economic
Competitiveness

IP rights create jobs and fuel economic growth, turning intangible
assets Into exclusive property that can be traded in the marketplace.

The most recent report on IP-related jobs in the U.S. from the
Department of Commerce and the Patent and Trademark Office
found that in 2010, direct employment in the most IP-intensive
industries in the U.S. accounted for 27.1 million jobs, and indirect
activities associated with those industries provided an additional
1 2.V million jobs for a total of 40 million jobs, or 27.7 percent of all
jobs in the economy.

According to economists Kevin A. Hassett and Robert J. Shapiro, in
2010 the value of IP in the U.S. was between $8.1 trillion and $9.2
trillion, or the equivalent of 55-62.5 percent of GDP. In a knowledge-
based global economy. America’s ability to remain a world leader In
innovation depends on strong protection of IP.

Intellectual Property Rights Must Be Protected Internationally
Through Effective IP Provisions in Trade Agreements

Far loo many foreign governments look the other way when it
comes to the theft of IP. The lure of access to the U.S. market
should be used as an incentive to convince trading partners that
they should increase their protection of IP rights. Therefore, strong
IP protections are integral to all trade agreement negotiations.

Intallectual Property Rights Are Integral to Consumer Protection
and National Security

IP rights protect consumers by enabling them to make educated
choices about the safety, reliability, and effectiveness of their
purchases. The protection of IP rights is also vital to national
security by preventing counterfeit parts, which compromise the
reliability of weapons systems and the safety of military personnel,
from entering the defense supply chain.

Intellectual Property Rights Must Be Respected and Protected
on the Internet

The Internet is an incredible platform for innovation, creativity
and commerce enabling widespread distribution of ideas and
information. However. IP theft online is a persistent and growing
problem. Protecting IP and Internet freedom are both critically
important and complementary; they are not mutually exclusive.

A truly free Internet, like any truly free community. Is one where
people can engage in legitimate activities safely, and where bad
actors ai e held accountable.

Voluntary Inltiativas to Address Intellectual Property Theft Are
Positive

Good faith actors in the Internet ecosystem should engage In
private sector, voluntary initiatives to address illegal conduct.
These voluntary efforts can empower consumers to rriake educated
decisions about their online activities and encourage investment,
innovation and jobs.

We encourage you to consider these guidelines as you review and
discuss existing laws and regulations governing IP, The Founding
Fathers understood that by protecting the proprietary rights
of artists, authors, entrepreneurs, innovators, and inventor-s,
they were promoting the greater public welfare. The continued
protection of these fundamental rights is essential to American
innovation and competitiveness.

Sincerely,

James L. Martin

Chairman

60 Plus Association

Phil Kerpen

President

American Commitment

Daniel Schneider

Executive Director
American Conservative Union

Carly Fiorina

Chairman

American Conservative Union Foundation

Steve Pociask

President

American Consumer Institute
Center for Citizen Research

Thomas Sydnor il

Visiting Fellow

Center for Internet, Communications,
and Technology Policy
American Enterprise Institute

Ned Ryun

Chairman
American Majority

Douglas "Dee" Stewart

President

Americans for a Balanced Budget

Stephen DeMaura

President

Americans For Job Security

Grover G. Norquist

President

Americans For Tax Reform

Jeffrey Hazzella

President

Center for Individual Freedom

Peter Pitts

President

The Center for Medicine in the
Public Interest

Adam Nossoff

Professor of Law, George Mason
University School of Law
Co-Founder and Director of
Academic Programs,

Center for the Protection of
Intellectual Property

Mark Schultz

Professor of Law, Southern Illinois
University School of Law
Co-Founder and Director of
Academic Programs,

Center for the Protection of
Intellectual Property

Chuck Muth

President
Citizen Outreach

Col Francis X. De Luca USMCRIRet]

President
Civitas Institute

Thomas A. Schatz

President

Council for Citizens Against
Government Waste

Katie McAuliffe

Executive Director
Digital Liberty

Nance Haney

Director and Senior Fellow, Technology
and Democracy Project
Discovery Institute

Charles Sauer

President

Entrepi'eneurs for Growth

Robert Roper

President

Ethan Allen Institute

EricFeinberg

Executive Director

Fans Against Kounterfeit Enterprises

George Landrith

President

Frontiers of Freedom

Grace-Marie Turner

President
Galen Institute

Michael Krull

Adj. Professor of Politics and Public Policy
Georgetown University

Louie Hunter

Chairman

Georgia Center Right Coalition

Dr. Keli'i Akina

President

Grassroot Institute of Hawaii

Mario H. Lopez

President

Hispanic Leadership Fund

Harold FurchtgoU-RoO)

Senior Fellow
Hudson Institute

Sabrina Schaeffer

Executive Director
Independent Women's Forum

Robert D. Atkinson.

Founder & President

Information, Technology & Innovation

Foundation

Andrew M. Langer

President

Institute for Liberty

Tom Giovanetti

President

Institute for Policy Innovation

Geoff Manne

Executive Director

International Center for Law & Economics

Ambassador Mark Green

President

International Republican Institute

Sal J. Nuzzo

Vice President of Policy
The James Madison Institute

Seton Motley

President
Less Government

Colin Hanna

President

Let Freedom Ring

Bartlett D. Cleland

Managing Principal
Madery Bridge Associates, LLC

Mary Adams

Leader

Maine Center-Right Coalition Leader

Matthew Gagnon

Chief Executive Officer
Maine Heritage Policy Center

Stephen Parente, PhD

Director

Medical Industry Leadership Institute
(MILIl University of Minnesota

Brian HcClung

Chairman

Minnesota Center Right Coalition

Kim Keenan

President & CEO

Minority Media & Telecommunications
Council

Lieutenant Colonel Allen B. West

(US Army, Ret) President/CEO
National Center for Policy Analysis

Justin Velez-Hagan

Founder/ Executive Director
National Puerto Rican Chamber of
Commerce

Todd McCracken

President and CEO

National Small Business Association

Scott Cleland

Chairman
Net Competition

Sally C. Pipes

President and CEO
Pacific Research Institute

Kevin P. Kane

President

Pelican Institute for Public Policy

Charlie Gerow

Chairman

Pennsylvania Center Right Coalition

Ron Nehring

Chairman

Project for California's Future

Lorenzo Montanari

Executive Director
Property Rights Alliance

Don Racheter, PhD

President

Public Interest Institute

Steve Smith

Executive Director
Rainbow PUSH Coalition

Jason Llorenz, JD

Senior Fellow

Rutgers University School of
Communication & Information

Karen Kerrigan

President & CEO

Small Business & Entreoceneurship
Council

David Williams

President

Taxpayers Protection Alliance

Patrick Rosenstiel

Executive Director

Trade Alliance to Promote Prosperity

Javier Palomarez

President and CEO

United States Hispanic Chamber of

Commerce

Gregory Dolin

Associate Professor of Law & Co-Director.
Center for Medicine and Law
Associate Director, Center for Law of
Intellectual Property & Technology
University of Baltimore School of Law

Chris Holman

Professor of Law

University of Missouri-Kansas City
School of Law

Kristen Jakobsen Osenga

Professor of Law

University of Richmond School of Law

Jonathan Taplin

Director, Annenberg Innovation Lab
University of Southern California

Ron Busby

President and CEO
US Black Chambers. Inc.

Susan Au Allen

National President and CEO
US Pan Asian American Chamber
of Commerce
Education Foundation

Barbara Kasoff

President and Co-Founder
Women Impacting Public Policy, Inc.

Mr. Collins. Ms. Pallante, you’re back, and it’s good to have you
here.

Ms. Pallante. Thank you.

Mr. Collins. Your staff and you, we have probably developed a
very good relationship I feel like, and it’s because I think of your
frankness. I think it’s because of your staffs willingness to be open
about where you are in the situations that you’re facing. I think
also, just as a little bit for those who’ve been here for the hearing
as well, I think the good part about it it is time for us to act. It
is time for Congress to act. You have gave ideas and you have laid
it out fairly well, and I do appreciate that. And we’re going to talk
about a little bit of that today in my time of questioning.

But one of things I want to go back to, it’s been mentioned a lot,
is the copyright in the music marketplace that we have spoke of
before. Those guiding principles, as you know, and most everybody
in this world and hopefully in this room know that I introduced the
Songwriter Equity Act, along with my friend from New York as
well, to make modest fundamental changes to section 114 and 115
of the Copyright Act, and I believe it comports with the principles
of fair compensation that you talk about.

Do you agree that the Songwriter Equity Act is ripe for congres-
sional consideration and passage?

Ms. Pallante. I do. It’s a great framework. It reflects everything
we said in our report on those issues. What we provided you with
is a bigger ecosystem with more issues. We gave you all the music
issues in one bundle.

Mr. Collins. Yes, you did.

Ms. Pallante. We thought that would be more fun for you. We
obviously defer to you. If you want to pull out some issues that are
more ripe than others.

Mr. Collins. Well, and can I just — ^because we’ve had this con-
versation. And I think sometimes that getting this whole thing —
we’ve looked at this sort of ball of copyright, and I think one of the
things is what is putt read out there? Where are we going with this
so that the community, not just music, but publishers, everything —
and writers all look at this. And so I am anxious to sort of see
where we’re going, and I appreciate your comments on that.

If we don’t act, do you see a down side in the marketplace on
these issues, especially from the songwriter and creator standpoint?

Ms. Pallante. I’m sorry. One more time.

Mr. Collins. If we don’t act, if Congress doesn’t act, we continue
to sort of move — do you — what kind of downside do you see from
your position.

Ms. Pallante. Oh, we are already torturing our music commu-
nity, right, on music issues. So I don’t know if your question’s
broader than music, but in that space alone

Mr. Collins. It is.

Ms. Pallante. So, in general, the fundamental principles of the
Copyright Act are strong. We have a duty to protect exclusive
rights, provide flexible exceptions, but limited, and to provide
meanin^ul enforcement. So many of the provisions that we have
now are from the analog world or older, from the turn of the cen-
tury. And we’re trying to reinforce the incredible creative output of

the United States. And to do that, we owe all creators, all investors
in the marketplace and the public a strong Copyright Act.

Mr. Collins. Okay. One of the things — and you’ve always been
very blunt, and I appreciate that. And for anyone who would take
your bluntness to be anything else, consider it — you know, I would
just say to them, this Congress, and especially this Congressman,
would take to grass the exception if anyone was to say anything
about that. So I’m going to ask direct questions; we’ve talked about
this. On administering, because, in your report, it’s very broad, es-
pecially for music, and we’re not even touched the other parts, and
I believe that leads to something that I said in one of these hear-
ings earlier, that I’m very concerned your department would have
a trouble handling that given the current structure.

So if the Copyright Office was not located in the Library of Con-
gress, you know, and did not act as a subdepartment under the au-
thority of the Librarian of Congress, could you more effectively ad-
minister and sustain our national copyright system?

Ms. Pallante. There’s no question.

Mr. Collins. And, again, 1 don’t think that’s a fault of anyone.
I think it’s the development of the process. But you do report to the
Librarian of Congress. Correct?

Ms. Pallante. Absolutely. My whole staff does.

Mr. Collins. And really from a constitutional perspective, does
that not at times lead to a conflict, inherent?

Ms. Pallante. Yeah. It’s a very interesting constitutional ques-
tion. So, legally, there are potentials for conflict all the time. The
Library has a library mission. The Librarian’s being asked to over-
see two very different missions at the same time. There’s an ac-
countability question. The Librarian is appointed by the President
and, therefore, can appoint inferior officers like the Register. That’s
the legal accountability.

But the practical accountability is that Librarians serve multiple
Presidents generally, and so the accountability as a practical mat-
ter is less clear. After the — there was a case where the Department
of Justice basically said you are in the executive branch, not the
legislative branch, which opens the door for us not to be able to
serve Congress the way we have in the past. So that’s why we’re
asking for a secure legal footing.

Mr. Collins. Well, and I think that is something that we will
have because I am concerned about sometimes basically you getting
contradictory directives from the Librarian’s mission, and no of-
fense to them. I think they have that perfect mission to do. They
need to encourage — but when we talk about IT, we talk about all
these other things, you are in a different situation. I want you to
continue, you and your staff, to keep that fight going because you
do have Members who are intensely interested in what’s going on
there because I believe it is the very underpinning of our founda-
tion for the next generation of economic development and also the
creators that have been around forever. So I do appreciate that.

With that, my time has expired, and I recognize the gentlelady
from Texas, Ms. Jackson Lee.

Ms. Jackson Lee. Let me thank you for your presence here
today, and I know that Members have been going in and out be-
cause we’ve been detained in other meetings, and in fact there is

one overlapping now. But I think it’s very important to, one, em-
phasize how important copyright and intellectual property is to this
Committee, to this Congress, and to the Nation, and I might say
that you are particularly important today because the prime min-
ister of Japan in his speech just finished and indicated his commit-
ment to protecting intellectual property, of which I think he re-
ceived a standing ovation. So you might want to use that quote or
comment on how important it is to do that.

Let me go to the whole question of finance and staffing. In your
testimony, you mentioned that the Copyright Office has one of the
smallest staffs within the government generally, and so I would he
interested in how that’s impacting on your work, and as we’re
going forward, have you looked at — I know you looked at the Presi-
dent’s budget, but we’re getting ready to go forward. We are abso-
lutely opposed to sequester. We think it has had a dastardly im-
pact. But I’d like to know presently what your situation is with
your copyright staffing.

Ms. Pallante. Thank you. Congresswoman Jackson Lee.

I think we should be lean and innovative, and I think when we
add staff, they should be the kind of staff that can take us into the
21st century. That said, we’ve lost over 100 people since 2007, and
we only — you know, we have under 400 FTEs filled now. That’s
just way too small to do the kind of complex work that we do, and
it’s much smaller than the staff that previous Copyright Offices
had when they were doing less complex things. So, while I think
we should stay small, I think we are cut to the bone at the mo-
ment.

One thing that has been rather frustrating for me is that in my
conversations with the community, the tech sector, and the content
industry, it became clear that we should have more hands-on tech-
nology expertise. So I took the step of hiring the first Copyright Of-
fice CIO, chief technologist, and filled that position last year, and
then hired a deputy as well for the purpose of figuring out what
our infrastructure should be, what our databases should look like,
what our enterprise architecture should be, and then to build out
the kind of staff that we need slowly, but using our budget alloca-
tions.

What was frustrating for me is that because best practices in the
Federal Government generally avoid duplication, when the Govern-
ment Accountability Office audited the Library and made its 39
recommendations about how to fix that very severely deficient sys-
tem, one of the things they said was that there shouldn’t be mul-
tiple CIOs. There shouldn’t be duplications of staff. So I am really
caught in a bind on this, and I really am asking the Committee to
help because I frankly think it’s ludicrous that the Copyright Office
wouldn’t have data experts and IT staff.

Ms. Jackson Lee. I’m going to follow up on that line of ques-
tioning.

Let me just quickly ask this question about modernizing the Of-
fice with the structure of greater legal and operational independ-
ence. And what should Congress consider in that new structure?

And let me get in another question as well because I think this
goes to how you do your job. And I like the word “lean but effec-
tive.” I like to say that. Lean and ineffective or with the shades

down and the doors locked are not helpful to creating the economic
engine that you want to create. So the other question I would have,
I’m wearing my Homeland Security hat, we just passed two
cyhersecurity initiatives last week, when I chaired the Transpor-
tation and Security and Infrastructure Committee, we recognize,
and I know that number’s gone up, 85 percent of the cyber owner-
ship is in the private sector, but the private sector submits through
the copyrighting process their data.

So the question I’d ask is the question about legal and oper-
ational independence, but also how important it is to have a tech-
savvy office

Ms. Pallante. Yes.

Ms. Jackson Lee [continuing]. That puts for you, the govern-
ment, an infrastructure to protect the intellectual property that you
are now the custodian of or the requests that come in, the applica-
tions that come in. If you would include that in your coming to-
gether of your answer and the kind of investment and planning you
think we need for a tech-sawy office that is 21st century.

Ms. Pallante. Thank you so much for the question. That is ex-
actly the crossroads that we find ourselves at. How do we build out
the tech-sawy office that actually not just serves the digital econ-
omy but interacts with it in a way that facilitates it? So when peo-
ple are submitting to us for registration digital works, they want
them to be secure. They want them to be effective for registration
purposes. And they want the technology to accept the data that
they’re sending us and the files, not to not recognize it because
we’re using antiquated technology. I don’t think that’s too much to
ask when people are seeking legal protection and, hence, remedies.

They then want the chain of commerce to reflect the entire copy-
right transaction. So people register with us, and then later they
might license their works. And then we record those licenses, and
the metadata should be the same global identifying information
that is used in the private sector. That is exactly the vision that
you should expect for the 21st century Copyright Office.

And as to cost, we, as I said, are two-thirds fee-funded now, but
that is because we are also intertwined in the Library’s IT. That
could be viewed as a subsidy. My argument would be that that is
not a subsidy that is working for the copyright community. And so,
as we look at the proper ratio of taxpayer investment and fees, we
should go back to what you just said and think about what it takes
to invest in the economic engine that is the Copyright Act for this
country.

Ms. Jackson Lee. And do you think the operational and legal
independence would help you as well as you look forward just re-
structuring or structuring the Office?

Ms. Pallante. Yeah. I think it’s essential because if you don’t
have that directive, you have an agency that is being required to
find synergies even though the missions are different and to use IT
investments for multiple competing purposes. And even in the sys-
tem we have now where people are paying us for services, nonethe-
less the money needs to be allocated in this kind of central IT envi-
ronment, and it hasn’t worked, and I hope that the Library makes
all the improvements it needs to make for the national Library, but

I don’t think it’s fair or logical to ask the Copyright Office to wait
until that happens and then to expect that it will work.

Ms. Jackson Lee. Mr. Chairman, and I thank you. I saw the
Chairman with the gavel up. I’d ask unanimous consent for an ad-
ditional minute just to pose a follow up on the questions that I just
gave her.

Mr. Collins. At this point, we have a hard meeting coming up
at 1 o’clock they’re going to have to clear the room for. So at this
point

Ms. Jackson Lee. Thirty seconds then?

Mr. Collins. How about 15?

Ms. Jackson Lee. Okay. But she’ll have to ask her question.

We know that Korea and Singapore have strong copyright protec-
tions. Should we have that in the TPP?

Ms. Pallante. Strong copyright protections in the TPP? Should
we have strong copyright protections in the TPP?

Ms. Jackson Lee. Yes. We know Korea and Singapore have

Ms. Pallante. We should most certainly have strong copyright
protections as negotiating goals of the TPP.

Ms. Jackson Lee. And the Congress — you’re asking us on some
of the items that you’ve just said to help you with the tech and the
funding, staffing, and the operational control.

Ms. Pallante. Yes. You are our oversight Committee. We need
you to direct us.

Mr. Collins. And the gentlelady

Ms. Jackson Lee. Thank you.

Mr. Collins [continuing]. Had a wonderful Georgia 15 seconds.

With that, the gentleman from New York is now recognized.

Mr. Jeferies. Thank the Chairman, and I thank the Register for
your testimony here today

Ms. Jackson Lee. I yield back.

Mr. Jeffries [continuing]. And your

Mr. Collins. Thank you. Since the time is expired, that’s won-
derful.

Mr. Jeffries. Thank you for your testimony here today, and for
your thoughtfulness on a whole host of these issues.

Let me just begin by just trying to get a deeper understanding
of your perspective as it relates to the need for independence.

I think the three things that have been under consideration in
terms of a different model from the current one, would, one, obvi-
ously, involve a Presidential appointment but the Office remaining
within the Library of Congress; two, taking the Office out of the Li-
brary of Congress and placing it perhaps within another depart-
ment, most often discussed is the Department of Commerce; and
then, three, creating an independent agency.

It’s my understanding, of course, that you strongly support the
third option, an independent agency. Is that correct?

Ms. Pallante. That’s correct.

Mr. Jeffries. And so that would involve both a Presidential ap-
pointment —

Ms. Pallante. Yes.

Mr. Jeffries [continuing]. Of the director. Correct?

Ms. Pallante. Yes.

Mr. Jeffries. And, presently, you’re appointed by the Librarian
of Congress. Is there a fixed term to that appointment, or do you
serve at the pleasure of the Librarian?

Ms. Pallante. Serve at the pleasure of the Librarian. The Li-
brarian has the power to appoint and remove the Register and the
entire Copyright Office staff, actually.

Mr. Jeffries. Now, in the context of an independent agency,
would you suggest, or is it your view, have you given any thought
to whether a fixed term would be appropriate connected to the
Presidential appointment to establish and embed the independence
of the agency?

Ms. Pallante. Yes. So that’s a great granular question. My un-
derstanding is that in order to make it an independent agency,
which is a way of saying that you are preserving the role that the
agency would play with Congress, because if the agency is in the
executive branch fully, completely, it will be subject to the normal
clearances of executive branch agencies when it speaks to Con-
gress. So, in order to preserve that 118-year tradition, the Presi-
dent would appoint the Register or the director, the Senate would
confirm the position, that’s the accountability that you need be-
cause the system is so important. But, by Congress setting a fixed
term. Congress is saying you’re not serving at the pleasure of the
President completely. You’re serving subject to a term that Con-
gress has enacted. That’s point number one to make it inde-
pendent.

Point number two is that you would specify that that agency,
when called by Congress, will speak impartially and freely.

And, thirdly, you will decide what the regulatory powers of that
agency are. Could just be registration, recordation, statutory li-
censes. It could be small claims. You could add things over time,
but it’s completely in your discretion.

Mr. Jeffries. And, in your view, is that important, given the
long tradition and involvement in Congress with respect to copy-
right and the fact that our authority to create an intellectual prop-
erty system in fact traces back to Article I, section 8, clause 8, in
the Constitution?

Ms. Pallante. Yes. And, you know, you didn’t have a Copyright
Office the entire time, but you have had one since 1897, and copy-
right policy has always been very hands on in Congress. It has the
only position in the government that allows the kind of balancing
of equities that is essential to a good Copyright Act. The Supreme
Court has affirmed this multiple times that it is in Congress’ power
to do that and to decide the overall regime. So I would be person-
ally quite heartbroken to see that dissipated. I think it served the
Nation well, and I think that an agency that continues to serve
Congress but also continues to interact in a coordinated manner
with the Administration is a great model for the 21st century.

Mr. Jeffries. And in order to have sort of a modern, fully func-
tional, first-rate, 21st century Copyright Office, how important is
the budget autonomy that would be provided in an independent
agency context that might not necessarily exist if you were to be
resident within the Department of Commerce or even remain with-
in the Library of Congress even as a Presidential appointee?

Ms. Pallante. I think it’s crucial. So you have never had a Reg-
ister tell appropriators directly and freely what the Office needs be-
cause that’s not how budgets work in the Federal Government. You
wouldn’t have it in the Commerce Department either. What you
will always have, unless you give budget autonomy, meaning that
the head of the Office can tell the appropriators what the needs are
and then have a direct conversation. If you don’t have that, you
will always have Copyright Office needs being weighed along
things that are not about the Copyright Office.

Mr. Jeffries. As my time expires, one last question. With the
leadership of my good friend from Georgia, Representative Collins,
in a bipartisan way, several of us have b^ecome interested in resolv-
ing inequities that exist in the compensation of songwriters. And
Congressman Collins touched on this to some degree, but I just
wanted to ask one followup question. You mention that music li-
censing issues broadly defined are ripe for congressional action. Do
you think that there’s room for us to precisely consider the dynamic
that songwriters find themselves in in terms of their compensation
or perhaps moving toward a willing buyer/willing seller standard,
and also allowing the rate courts to have an opportunity to con-
sider how artists are compensated on the song recording side and
factoring in what is fair?

Ms. Pallante. Yes. So we thought those provisions in the Song-
writer Equity Act were right on the money. I think we have talked
extensively today about why a willing buyer/willing seller is the
right move toward the free market. A better reflection of it than
a regulated rate, but the issue about what the courts are allowed
to consider is a crucial one, and we are fully supportive of changing
that.

Mr. Jeffries. Thank you very much.

I yield back.

Mr. Collins. I thank the gentleman from New York.

As we get ready I just want to — something that was brought up
is your office has been since 1897. I think what’s amazing is, is
some of our creators, and especially in the music community are
still dealing with laws that were created only 15 to 20 years after
that. That seems to be ripe, if not overripe, for a change. But I also
want to remind — you also represent a vast industry that is — that
is growing and changing. I hold in my hand here something that
I found over the weekend. And if you look through these, here is
something that you’ve heard me mention before about why song-
writers matter. These are handwritten songs and poems that were
written from my wife’s grandfather and her brothers.

Ms. Pallante. Is that right?

Mr. Collins. They’re somewhere in the neighborhood of 50 to 60
years old. They were written probably at a kitchen table or on the
side of the road. But, for everyone who is here, and for the reason
that operate your office and what you do every day, there’s a book
to be written, there’s a song to be sung. There’s these creative
rights that I believe the Copyright Office is there to protect, not to
inhibit but to promote creativity like’s in this folder right here.

And, with that, that concludes today’s hearing. Thanks to the
witnesses for attending.

Without objection, all Members will have 5 legislative days to
submit additional written questions for the witnesses and addi-
tional materials for the record.

With that, the hearing is adjourned.

[Whereupon, at 12:53 p.m., the Committee was adjourned.]

APPENDIX

Material Submitted for the Hearing Record

Response to Questions for the Reeord from the Honorable Maria A. Pal-
lante, Register of Copyrights and Director, United States Copyright Of-
fice

I Kc|ii>(cr of Copyright* of (he UniieJ !i<«(cs ol Antenui

t Sl 4 lr> C«'pvrii(lil i.Xhif I'” Mi.Uf*rn«ltnfe Svrni*c^> WjshinitiHii, { ’; . , 707- 70^ M*;"

JuK 2,2015

C'hairman Ikih UiKKilattc
Committee un the Judician
United Suites House of Representatives
2138 Ra>bum Mouse Office Building
Washington. O.C. 205 1 5

Kc: Responses to Questions for the Record Regarding the

April 2Q, 2015 Hearing on the Register's Perspective on Copyright Review

DearChainnan Gtx>dhile

1 hank you for holding the April 29. 2015 hearing on tiie Register's Perspective on Cop>Tiglii
Review. I was honored to lestif> about important copyright matters and to respond to Member questions.
I am also pleased to prov ide responses to the Questions for tlie Record posed by Representative Issa,
Representative ChofTclz. and Representative Bass. 1 have enclosed these responses with this letter.

Respectfullv submitted.

Maria Pallonie

United Stales Register of Copyrights

( 85 )

QUESTIONS FOR THE RECORD FROM REPRESENTATIVE DARRELL ISSA (CA-49)

You have highUghled ihal. the Copyright Office currently suffers from inadequate lechnoJog}' and IT
structure. If the Copyright Office were moved out of the Library of Congress and made a pan of an
existing agency in the Department of Commerce, would the Office be able to gain assistance from the
Department, and specifically USPTO. in use of modem technolog\>? Has the Copyright Office examined
or had conversations with officials in those offices regarding how to develop and modernize IT needs?
Would moving the Copyright Office to an existing agency with modernized technolog}' needs make the

transition more efficient?

What the Cop\Tight Office requires is a lean, innovative, and modem technology stmcture and staff that is
focused singularly on the unique needs of the copyright system. To this end, in recent years, we engaged
in a comprehensive review of our lechnologv- requirements, drawing on public comments and the
impressive expertise of tlic technology, user, and content sectors.

As a matter of transparency, my Office commissioned and published an independent report in Febmary
2015, Report and Recommendations of the Technical Upgrades Special Project Team. The project

was led by the Copyright Office’s newly appointed Chief hiformation Officer. 1 created the CIO position
in 2014, as a first step to address major gaps in tlic technology services provided to us by tlic Library of
Congress, including an overall lack of attention to our needs. The entire copyright system is driven by-
data and technology, from the licensing of exclusive rights to the ^ministration of financial data to the
tracking of ownership and term. No Register can administer the copyright law effectively in the digital
age if the tccluiology and data teams that she depends upon operate under competing priorities and report
to supervisors outside of tlie Copy right Office. The eurrent state of affairs within the Library proves tliis
point.

My office also published an in-depth public study of the recordation system, w'hich remains a paper-based
system and is a key aspect of our modernization vision. The December 2014 report, titled Transforming
Document Recordation at the United States Copyright Office, A Report of the Abraham L. Kaminstein
Scholar in Residence, was prepared under the independent auspices of our scholar in residence. The
report provides a series of exciting options tor the future, but also shows that the Copyright Office has
suffered because its mission has never been the primary focus of its parent agency. Thus 1 agree with
members of the public and tlic press who have noted time and time again tliat the Copyright Office should
be positioned to serv'e its customers directly. We are now working vvitli Congress to create a detailed
modernization plan. *

Moving the Copyright Office to the Department of Commerce or, more specifically, into tlie Patent cuid
Trademark Office (PTO) is a complicated solution. It is difficult to understand how ainning the copyright
system througli the patent and trademark system would serve the unique and important objectives of tlie
copyright law . The Copyright Office facilitates the vast cultural and creative output of U.S. authors as
well those who inv-est in and distribute their rich works, and the copyxight marketplace contributes a
trillion dollars to tlic economy annually.

' H.R. Rhf. No. 114-110 (2015).

Members of my staff spoke with PTO officials regarding PTO's technology on a couple of occasions in
recent years, including most recently during the Technical Upgrades Project mentioned above. They
learned tliat while the PTO's system works well for that agency overall, it has been highly customized to
meet the veiy- specific needs of patent and trademark examination and records. In other words. Congress
has provided to the PTO what w^e need at the Copyright Office — ^the legal and budgetary^ authority to
build a properly devoted IT enterprise."

The Committee's witnesses underscored tliis conclusion during the House Judiciary Committee’s
Febmaiy- 2015 hearing. The hearing, titled U.S. Copyright Office: Its Functions and Resources^
highlighted some of the fundamental differences of copyrights as compared to trademarks and patents,
and the fact that placing copyright fiinctions within an agency focused primarily on commerce may not
serve the broader interests of tlic American public.' More practically, tlic technological needs of tlic
patent/trademark mid copyright systems may differ. Patents, for example, require extensive supporting
documentation, and in May 2015, tlie average time from initial receipt of the application to final
disposition (traditional total pendency) was reported at 26.7 months. In our view, subsuming the
copyright functions whthin an agency devoted to patents and trademarks w-ould likely result in fewer
imiovativc technology strategics that arc designed specifically for the unique aspects of copyright
registration - not more. This is not to suggest that Copyright Office leadership could not continue to
consult w ith PTO or other agencies on technology decisions.

If the Copyright Office were moved to the Department of Commerce, how would the relationship between
the Register and the Under Secretary of Commerce for Intellectual Property be structured, especially
regarding the current copyright fiinctions of the Under Secretary?

Overtlie 118 years since tlie Copyright Office w-as created by Congress, it has played an integral role in
copyright law and policy. Because the Office administers the copyright laws, it has firsthand and first-
rate expertise in interpreting legal provisions and analyzing gaps in the statute. Over the years, as
Congress created additional intellectual property responsibilities in the government, it w-as careful to
ensure tlic ongoing role of the Register in intellectual property matters and copyright law in particular.

Congress defined the relationship between the Register of Copyrights and the Under Secretary' of
Commerce for Intellectual Property when it amended the Patent Act in 1 999. There, the Under Secretary,
who is also the Director of the PTO, is authorized to advise the President and federal departments and

■ Additionally, I recently hired Ricardo FaiTaJ-Feijoo as Director of the Copyright Technology' Office, and he has
extensi\'e knowledge of the Depannient of Commerce IT sy-stenis. Prior to joining the Office, Mr. Farraj-Feijoo
serv'ed as the Director of Information Teclmology' Services within the Office of the Chief Infonnation Officer at the
U.S. Department of Commerce, where he implemented cloud-based solutioas as well as seiver viitualization farms.

^ See generally U.S. Copyright Office: Its Functions and Resources: Hearing Before the H. Comm, on the Judiciary:
1 14th Cong. (2015); see also The Omnibus Patent Act of 1996: Hearing on S. 1961 Before the S. Comm, on the
Judiciary:, 104th Cong. 1 9, 24 (1996) (statement of Maiybeth Peters, United States Register of Copyiights and
Director, U.S. Copyright Office) (staling that copyright law and policy have "a unique inlluenee on cullurc,
education, and the dissemination of knowledge,” and the values that underlie it “may be slighted if copyright policy
is wholly determined by an entity dedicated to the furlhcranec of commerce.”).

'' 'Traditional Total Pendency, UNllHl) S'I’.ATKS P.ATKN'l' .AND 'I’RADKMAKK Okkick (May 2015),
http://vvvvvv.uspto.go\7eorda/dashboards/palenLs/kpis/kpi()verallPendenev.kpi\ml.

agencies on intellectual property matters. By statute, he or she is required to have professional
background and experience in patent or trademark law.^

In crafting tlic position of Under Secrctaiy-, Congress made clear that tlie Register of Copyrights has a
separate and ongoing statutory- role to administer and interpret the Copyright Act, and to provide legal and
policy assistance to Congress and federal agencies." Moreover, the Patent Act provides that the Under
Secretary must consult directly with tlic Register of Copyriglits on all copyright related matters.^ And it
provides further that the Under Secretary's powers and duties to advise generally on IP cannot derogate
from the separate functions and duties of the Register of Copyxights, as set forth in the Copyright Act.^
The Copyright Office and PTO have managed these separate mandates for many years. Each office
works with the other on policy matters of mutual interest, each drawing on its specific statutory' mandate.

If Congress were to move tlic Copy right Office to the Department of Commerce, it would have to
consider how to accurately reflect this long-standing statutory- structure and substantive expertise. From
my perspective, the problem we have now is how to position the Copyright Office to perform the work it
needs to do in the most efficient and effective manner. To do this, we need to ensure that meeting the
objectives of the copyright system is not a secondary' mission but a primary mission.

.35 U.S.C. § 2(b)(8)-(9); 35 IJ.S.C. § 3(a)(1).

17 U.S.C. § 701.

35 IJ.S.C. § 2(c)(5) Uln exercising ihe Dircclor’s powers and duties under this scelion, the Director shall consult
with the Register of Copyright on all copvrighl and related matters.”).

^ 35 IJ.S.C. § 2(c)(3) ^Nothing in subsection (b) shall dcTogate from the duties and funclions of the Register of
Copyrights or otherwise alter current authorities relating to copyright matters.”).

QUESTIONS FOR THE RECORD FROM REPRESENTATIVE JASON CHAFFETZ (UT-03):

You noted in your leslimony that the Copyright Office needs information technologv itnprovetnenls in
order to administer copyright laws effectively in the digital era. At the same time, the Copyright Office
faces inadequate financial resources to support these changes. In March 2015 the Office of Management
and Budget issued a Congressionally-requested report on no-cost contracting that explored its potential
to enable IT upgrades in a cost-constrained environment. Has the agency considered no-cost contracting
for improving the Copyright system?

Thaiik you for highlighting this option. Tlie Cop\Tight Office is interested in and open to no-cost
contracting as one option to address some of its teclmolog\' needs. No-cost contracting occurs where a
contractor provides a sen ice to an end user, but instead of receiving compensation from the agency, the
contractor charges and retains fees paid by the end uscr.^ Currently, tlie Office has limited expcricnec
using no-cost contracts for non-IT services. (The Copyright Office is not an agency so all contracts arc
administered by the Library’ of Congress.) As tlie OMB's March 2015 letter referenced, experience with
no-cost contracts in the IT realm has been somewhat limited overall in the federal government to date.'"

Wc recognize tliat there may be additional opportunities to leverage no-cost contracting for some of our
fee-based services, hi doing so, wc would have to thoroughly consider any potential legal or conflict
issues. We will continue to review tlie issue as we fiirther develop our IT strategies. And I have
incorporated the concept of no-cost contracting into the modernization assessment we are now
undertaking for Congress.”

^ See Letter from Gaiy L. Kepplinger, General Counsel, U.S. Gov’t Accountability Office, to lion. Barbara A.
Mikiilski. U.S. Senate 2 (Nov. 27. 2007) (intemal citation omitted), available at
http:/A^ww^gao.go\7decisions/appro/308968.pdf.

l,cLtcr from Anne H. Rung, Administrator, Office of Kcdcral Procurement Policy, Office of Mgml. & Budget,
Hxec. Office of the President, to Hon. Hal Rogers, Chairman, Comm, on Appropriations, U.S. House of
Representatives .3 (Mar. 1 2, 2015) (on file with United Slates Copyright Office) (“Hxpcriencc with no-cost contracts
to suppoit IT requirements has been limited to date.").

" H.R. Rkp. No. 114-110 (2015).

QUESTIONS FOR THE RECORD FROM REPRESENTATIVE KAREN BASS (CA-37):

Register Pallanle. if we give yon the tools yon need at the Copyright Office, whal impact do you think that
would have on the entire copyright system?

A fully -functioning Copyright Office that has all of the technological and administrative tools it needs,
and that the general public desires, would provide huge benefits tor the copyright system and the
American economy as a whole. The Copyright Office is at flic center of a vibrant copyright marketplace
tliat serves multi-billion dollar companies and individual users and creators alike, hi a 2015 technical
upgrades report, the Office's first Chief hiformation Officer identified key areas of improvements for
Office infrastructure that would significantly foster growth and innovation in the copy right marketplace.
For example, a digitally-integrated Copyright Office should include mobile capabilities that would allow
external users to submit copyriglit applications and use Copyright Office scr\ ices tlirough smart phones
and tablets; tlic Office should identify and consider enhancements to its existing public records; and, as is
critical in today^’s online environment, any next generation sy'stem must securely protect the works
submitted for registration.’” An updated Copyright Office would provide owners and users of
copyrighted works easy access to accurate information to facilitate the licensing and dissemination of
copyrighted works worldwide. Shared database technologies would enable efficient licensing payments.
Stretunlined registration procedures would encourage and further incentivize creators to create. Tlie list
of potential benefits is endless and exciting.

In the process of making your recommendations for reforms, how does the Offee engage the user
community, and what input has the user community provided you?

All of the w ork of flic Copy right Office is public and transparent. When the Office engages in major
analyses, as it has done whtli respect to the copyright review process and corresponding studies, it
conducts public inquiries that include published notices that notify the copyright community (including
users, owners, consumers, and scholars) about opportunities to submit comments on the record and/or
attend meetings or hearings with Copyright Office staff, hi addition. Copyright Office staff, including tlic
Register, General Counsel, head of Policy and Litemational Affairs, and head of Registration Policy and
Practice, travel to speak at or attend meetings with stakeholders, including major organizations or
companies that identify as users of copyrighted works. This input is critically important and much
appreciated,

For example, during the past two years, my Office has completed a number of comprehensive studies on
the following topics: the music licensing finmewoik (February' 2015), remedies for small copyright
claims (September 2013), orphan works and mass digitization (June 2015), resale royalties (December
2013), and a separate study on potential technical upgrades to the Office’s IT infrastructure (Febaiary
2015). During tlicsc public coimncnt periods, wc have received numerous comments from those
representing user interests, such as the National Federation of the Blind, the Electronic Frontier
Foundation, Public Know ledge, and the Consumer Federation of America. Users speaking to the
Copyright Office have requested clarity in the law so that the rules and any exceptions thereto are easy to

’■ Report and Recommendation of the Technical Upgrades Sjyecial Project Team, IJM'l'KD Sr.-Vl'KS COFYRKiHT
Office 8-1 1 (Feb. 2015), available al littp://copyright.gov/technology-reports/repoits/usco-teclmicalupgrades.pdf.

understand and to navigate. For example, Fredric Schroeder of the National Federation of the Blind,
speaking in a Copyright Office roundtable on orphan works and mass digitization, argued that the
structures put into plaee to allow access to digitized materials “should be simple enough, straightforward
enough that blind people cuid others who are using these works can readily use them and use them w'ith,
certainh-, whatever safeguards are needed, but still remembering the needs of the end user.'’'^ Vickie
Nauman, former North American President for 7Digital Inc., lamented that “[t]hc complexity of
interpreting U.S. music licensing laws £uid assessing risk is unintelligible to the marketplace cuid is
hampering innovation. Many of the Office’s recommendations for updates to the copyright law reflect
the important concerns and comments of copyright users. And in fact, many if not most copyright owmers
arc also users of copyrighted works.

Orphan Works and Mass Dij^dizadoji Roimdiahle. U.S. COPYRIGHT OmCF. 197 (Mar. 1 1, 20 14) (statement of
Frcdric Schroeder, National Federation of the Blind), available at
hUp://eopyrighl.go\7orihan/Lranseripl/()31 1 1.OC.pdf

Vickie Naimian, Comment in Response to March 17, 201 4 Notice of Inquiry. U.S. COPYRIGHT OFFICE (May 22.
2014), available at

hUp://eopyrighl.go\7poliey/musielieensingsludy/commenLs/UoekeL2014_3/Vickie_NaLiman_MI.S_2014.pdr.

Material submitted for the Official Hearing Record*

Letter from James H. Billington, The Librarian of Congress

Letter from Ruth Vitale, Executive Director, CreativeFuture; and
Sandra Aistars, Chief Executive Officer, Copyright Alliance

Letter from Rick Swindelhurst, President, Fairness in Music Li-
censing Coalition (FMLC)

Letter from Michael Beckerman, President & CEO, Internet Asso-
ciation (lA)

Recommendations of the Library Copyright Alliance (LCA) on
Copyright Reform

Letter from Christopher J. Dodd, Chairman and Chief Executive
Officer, the Motion Picture Association of America, Inc. (MPAA)

Letter from Daryl P. Friedman, Chief Industry, Government, &
Member Relations Officer, The Recording Academy

*Note: The submitted material is not printed in this hearing record but is on file
with the Committee and can also be accessed at: http: ! I docs.house.gov ! Committee !
Calendar I ByEvent.aspx?EventID=103385.

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